document cover sheet
TRANSCRIPT
DOCUMENT COVER SHEET
Please note that this document is a draft prepared on behalf of the BBOP Secretariat. It is a work in progress by the authors listed below and doesn’t necessarily
represent the views of the members of the BBOP Advisory Group.
Date updated: 5 October 2010
Title: Biodiversity offsets: policy options for government
Authors: Prepared by Michael Crowe and Kerry ten Kate
Abstract:
This paper draws on the experience of governments that have already developed and
implemented biodiversity offsetting policies. It also takes into account the practical experience
of businesses in putting offsets into place on a voluntary basis, including those undertaken in
collaboration with BBOP as pilot projects. Its purpose is to serve as a very basic introduction to
some key issues, which certainly deserve to be considered in more depth subsequently, and
thus to contribute to the consideration of biodiversity offset policy options by governments
and their advisors. The paper examines the principles underlying offsetting policy, identifies
the various roles of government in offsetting schemes, looks at the connections to other policy
areas and considers the significant implementation issues.
Following this introduction, section 2 sets out the fundamentals of biodiversity offsets and
biodiversity offset policy, including the principles for best practice biodiversity offsets, the
different approaches available to governments when considering an offset scheme and the
different policy options for biodiversity offsets. Various ways of implementing offset policies,
including through markets and existing permitting or consent use systems tied to
environmental impact assessment are discussed.
Section 3 explores the possible roles for governments in developing and implementing policies
on biodiversity offsetting. The roles include those of policy maker, regulator, market maker,
broker and monitoring and compliance agency.
Section 4 looks at the ways in which biodiversity offsetting policy can be integrated with other
policy areas including environmental impact assessment, strategic environmental assessment,
industry policy and whether offsets can be designed to offer multiple benefits (for instance,
carbon and water).
Section 5 covers capacity issues, reviewing the requisite skills and resources a government may
require to establish a biodiversity offsetting scheme. This section also discusses cost recovery
for situations where government services are provided.
Finally Section 6 looks at experiences in a range of situations around the world where
biodiversity offsetting has been attempted, in order to draw out the key lessons for success.
Please cite as: Crowe, M. and ten Kate, K. October 2010. Biodiversity offsets: policy options for government
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 2 of 41
Biodiversity Offsets: Policy options for governments
A draft for discussion
Michael Crowe and Kerry ten Kate
TABLE OF CONTENTS
Executive Summary page 3
1. Introduction page 6
1.1 Context and outline page 6
1.2 Definitions page 9
1.3 A brief history of biodiversity offsets. page 11
2. The basics of biodiversity offset policy page 14
2.1 The basic principles of biodiversity offsets page 14
2.2 Different kinds of offsets (voluntary; regulatory) page 17
2.3 Different kinds of policy and legal provisions on offsets page 20
2.3.1 Specific policy and law on biodiversity offsets. page 21
2.3.2 Integrating provisions on biodiversity offsets into other relevant policy
and law (EIA, SEA, sectoral, etc)
page 21
2.4 Ways of implementing biodiversity offsets page 24
2.5 Biodiversity offset markets page 25
2.5.1 First party and third party offsets page 25
2.5.2 Biodiversity credits page 25
2.5.3 Trading rules page 26
2.5.4 Biodiversity credit registers page 27
2.5.5 The design of biodiversity offset markets page 27
2.5.6 The benefits and risks of conservation banks page 29
3. Possible roles of government in establishing and administering policy on
biodiversity offsets (for each, describe briefly what it entails)
page 29
3.1 Policy-maker/regulator page 29
3.2 Provider, curator and source of authoritative biodiversity data page 30
3.3 Buyer of offsets page 30
3.4 Seller of offsets page 31
3.5 Broker page 31
3.6 Operator of register of credits, standard setting page 32
3.7 Provider of process to ensure permanence of offsets page 32
3.8 Monitor and enforcer page 32
3.9 Identifying and managing conflicts of interest between these roles (probity) page 33
3.10 Creating a market page 33
4. What kind of capacity does government need to take on biodiversity offset policy? page 34
4.1 Costs, cost recovery page 34
4.2 Skills and capacity page 36
4.3 Staffing levels page 36
5. Lessons learned to date and some suggested ways forward for governments
interested in exploring biodiversity offset policy options
page 37
5.1 Lessons learned page 37
5.2 Suggested ways forward for governments interested in exploring biodiversity
offset policy options
page 38
6. Interested in learning more? page 39
References page 41
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 3 of 41
Biodiversity Offsets: Policy Options for Government
Executive summary
Biodiversity offsets are designed to achieve no net loss (or a net gain) of biodiversity in the context of
development projects. This goes beyond traditional mitigation, and encourages business to take
responsibility for its impacts. Interest in this approach is growing as the potential of biodiversity offsets to
help achieve wider goals of conservation; wise land-use planning and sustainable development are
increasingly appreciated. Governments face the challenge of balancing economic development with a public
interest in protecting biodiversity.
By contributing to regional conservation and land-use planning, biodiversity offsets can help the 193
government parties to the Convention on Biological Diversity who committed to ‘achieve by 2010 a significant
reduction of the current rate of biodiversity loss’.
The purpose of this paper is to contribute to the consideration of biodiversity offset policy options by
governments and their advisors. The paper examines the principles underlying offsetting policy, identifies the
various roles of government in offsetting schemes, looks at the connections to other policy areas and
considers the significant implementation issues.
The paper is intended as a basic introduction to biodiversity offsets policy. We recognise that many of the
issues presented are complex and will benefit from more in-depth and detailed discussion. The main aim of
this initial draft is to identify policy options at a general level in the anticipation of subsequent papers based
on further research and consultation.
BBOP’s definition of offsets includes reference to ‘no net loss of biodiversity on the ground with respect to
species composition, habitat structure, ecosystem function and people’s use and cultural values associated
with biodiversity’.
There are broadly two kinds of biodiversity offsets:
(a) Voluntary biodiversity offsets, which a developer undertakes in circumstances where there is no legal
requirement to do so, because it perceives a business advantage (such as license to operate, reputational
benefits, competitive advantage, market share, etc); or
(b) Regulatory biodiversity offsets, which are required by law.
Governments can introduce biodiversity offsetting policy and regulation in two basic ways. The first is
through specific provisions on biodiversity offsets (and perhaps other aspects of biodiversity conservation)
and the second is to incorporate offsetting provisions into other laws and policies that deal with environment
impact assessment (EIA), land use planning, strategic environmental assessment (SEA), sectoral policies or
broader environmental policies.
The decision on which approach to take depends to some extent upon the legal customs of the jurisdiction
concerned, and also upon the scope of the other laws relative to the intended scope for biodiversity offset
requirements. For example, in a particular jurisdiction the EIA laws may only cover large projects or projects
in particular industry sectors (for instance, construction and extractives, but not agriculture). If the intention
is to introduce offsetting for a wider range of projects, it may be necessary to introduce a specific law
requiring offsets for the desired scope.
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 4 of 41
The main policy options for government seeking to implement an offsets arrangement are focussed on the
processes for specifying biodiversity offsets in relation to defined impacts. However, specifying an offset in
terms such as size, type, quality and locality is only half of the task. The next challenge is for the developer to
discharge the obligation to implement the offset. There are three main approaches to this task of
implementing biodiversity offsets: developer-initiated, in lieu fees and market mechanisms.
Under developer initiated offset implementation, while policy may encourage or require offsets, the
government generally takes a non-intervention stance on the manner of their implementation, and the onus
rests with the developers to find their own offsets (whether voluntary or required by regulation).
Under In lieu fees a government agency stipulates a payment from the developer with the intention of
deploying the funds at a later date to find a suitable offset.
Markets can also be used to supply biodiversity offsets for developers. Such markets do not usually develop
spontaneously, but require government intervention to set up the key components. Properly designed and
operated, markets can be very effective in supplying offsets in a timely and cost-effective manner.
The basic elements for an offset market are units of trade (credits), trading rules and credit registers.
Credits are units of gain that can be traded in an offset market. The key consideration for the utility of credits
is that they meet all the requirements for gain as specified in the offset policy of the jurisdiction. Government
can engender market confidence by establishing the property status of credits through legislation.
Biodiversity credit registers are another important component of an offset market. Registers serve two main
functions:
• To be the authoritative record of the number, location, characteristics and ownership of biodiversity
credits in the jurisdiction;
• To provide quality assurance for the registration (creation) of credits.
Governments can also assist the establishment of biodiversity offsets markets by facilitating the
establishment of marketplaces. A marketplace for biodiversity credits will comprise brokers and traders.
The degree of segmentation and the level of demand in the market can interact to influence the types of
offset supply mechanism that evolve in the market. These mechanisms include conservation banks,
aggregated offsets, bespoke trades and ‘over-the-counter’ arrangements.
The different possible roles of government in relation to biodiversity offsets policy are described. These are:
• Policy-maker or regulator
• Provider, curator and source of authoritative biodiversity data
• Buyer of offsets
• Seller of offsets
• Broker
• Operator of register of credits, standard setting
• Provider of processes to ensure the permanence of offsets
• Monitor and enforcer
• Identifying and managing conflicts of interest between these roles (probity)
• Creating the market
The main sources of the cost of developing and implementing biodiversity offsets policy are identified. The
costs associated with these various processes and services will vary from country to country and need to be
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 5 of 41
estimated on a case-by-case basis. However, experience in jurisdictions that have already established policies
and offset schemes of varying design and complexity has demonstrated that these are not trivial tasks. It can
be anticipated that it would take several years and the input of a variety of expertise to develop a policy and
establish an operating scheme. While there are many costs to be considered, a government could recover
these costs in part or in full. This is done by charging fees for the services provided to the users of the offset
scheme.
Some of the lessons that have been learnt from the experience in various countries from designing and
operating biodiversity offset policy and programmes are noted.
Finally the paper outlines suggested ways forward for governments interested in exploring biodiversity offset
policy options. The recommended steps are:
• Fact-finding and gap analysis – policy
• Fact-finding and gap analysis – biodiversity data
• Fact-finding– cost-benefit analysis
• Pilot projects
• Integrating biodiversity offsets with land-use planning at the national or regional levels:
• Identify, analyse and evaluate policy options
• Policy formulation and system design
• Implementation of policy, monitor and review.
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 6 of 41
Biodiversity Offsets: Policy options for governments
Michael Crowe and Kerry ten Kate
1. Introduction
1.1 Context and outline
About biodiversity offsets
While new construction and infrastructure are essential for development, they are currently a significant
cause of today’s unprecedented loss of biodiversity, which is recognised as one of the most critical global
issues facing humankind.1 Biodiversity is lost as natural habitats are destroyed and fragmented for
agriculture, fisheries, forestry, oil and gas, mining, transport, tourism and the construction of infrastructure all
play their part in the loss. In the search for sustainable development, companies, financial institutions,
governments and civil society are seeking innovative mechanisms to compensate for unavoidable losses to
biodiversity and impacts on human well-being and to attract more investment in conservation.
Biodiversity offsets are designed to achieve no net loss (or a net gain) of biodiversity in the context of
development projects. This goes beyond traditional mitigation, and encourages business to take
responsibility for its impacts and to internalise environmental costs. Interest in this approach is growing as
the potential of biodiversity offsets to help achieve wider goals of conservation; wise land-use planning and
sustainable development are increasingly appreciated. Governments face the challenge of balancing
economic development with a public interest in protecting biodiversity. By contributing to regional
conservation and land-use planning, biodiversity offsets can help the 193 government parties to the
Convention on Biological Diversity who committed to ‘achieve by 2010 a significant reduction of the current
rate of biodiversity loss’2.
Interest in biodiversity offsets continues to grow. There are four main drivers for their broader uptake:
• More governments introducing or exploring policy on biodiversity offsets;
1 The Global Biodiversity Outlook 3 (UNEP, 2010) finds that:
• Species which have been assessed for extinction risk are on average moving closer to extinction.
• Amphibians face the greatest risk and coral species are deteriorating most rapidly in status. Nearly a quarter of plant
species are estimated to be threatened with extinction.
• The abundance of vertebrate species, based on assessed populations, fell by nearly a third on average between 1970 and
2006, and continues to fall globally, with especially severe declines in the tropics and among freshwater species.
• Natural habitats in most parts of the world continue to decline in extent and integrity, although there has been significant
progress in slowing the rate of loss for tropical forests and mangroves, in some regions. Freshwater wetlands, sea ice
habitats, salt marshes, coral reefs, sea grass beds and shellfish reefs are all showing serious declines.
• Extensive fragmentation and degradation of forests, rivers and other ecosystems have also led to loss of biodiversity and
ecosystem services.
• Crop and livestock genetic diversity continues to decline in agricultural systems.
• The five principal pressures directly driving biodiversity loss (habitat change, overexploitation, pollution, invasive alien
species and climate change) are either constant or increasing in intensity.
• The ecological footprint of humanity exceeds the biological capacity of the Earth by a wider margin than at the time the
2010 target was agreed. 2 For information on the 2010 target, please see http://www.cbd.int/2010-target/. The Parties to the Convention on Biological
Diversity accept that the 2010 target has not been met. UNEP/CBD/COP/10/8 provides a report on implementation of the
Strategic Plan and progress towards the 2010 biodiversity target, drawing upon information from Parties’ fourth national
reports. UNEP/CBD/COP/10/9 by the CBD Executive Secretary offers an updated technical rationale for the proposed goals and
targets of the Strategic Plan. See http://www.cbd.int/cop10/doc/
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 7 of 41
• More companies undertaking biodiversity offsets voluntarily for business reasons. (The business case for
companies is described in Box 5 on page 18);
• More banks and investors requiring biodiversity offsets as a condition for access to credit or investment;
and
• More NGOs and civil society groups encouraging developers to undertake biodiversity offsets.
A growing number of governments are introducing or planning law and policy related to biodiversity offsets.
Many governments are committed to a target to achieve significant reductions of the current rate of
biodiversity loss within their jurisdictions. Some have gone further and made policy commitments aimed at
no net loss or a net gain of biodiversity. Biodiversity offsetting is a key policy measure that governments can
adopt as part of the implementation of these policy targets.
Offsetting provides a way of pursuing a no net loss outcome for biodiversity for development projects and
programs in the context of the ‘mitigation hierarchy’: (‘avoid, minimise, restore, offset’).
Biodiversity offsets can achieve more and better conservation outcomes than typically result from the
planning of mitigation measures for development projects. They are also a tool for companies to manage
biodiversity risk and opportunity, and for society to mainstream considerations of biodiversity into economic
decision-making, through governments’ planning processes, licenses and permits and financial institutions’
lending and investment decisions. As biodiversity offsets involve working with land managers to address
underlying causes of biodiversity loss, they offer indigenous peoples and local communities an opportunity to
be involved in project planning, and to establish offset activities that contribute to sustainable livelihoods.
Indigenous peoples and local communities sometimes object to development projects, feeling their
permission and involvement in decisions were not sought, that they will not benefit fairly and that the project
will have negative environmental impacts on their way of life. The process of designing and implementing a
biodiversity offset should involve affected and interested people to ensure they benefit, which builds
community support for regional and project development plans.
Properly planned at the landscape scale, biodiversity offsets can contribute to regional conservation and land-
use planning, and to the priorities set out in national biodiversity strategies and action plans.
Government policy on biodiversity offsets (whether voluntary or mandatory) can facilitate better
relationships between governments and developers with regard to the mitigation of biodiversity impacts.
Where developers are operating under clear guidelines, they can plan and implement their offsets in an
orderly and efficient way as part of the development project. This certainty can be beneficial not only for
development projects, but is also characteristic of a jurisdiction that is a ‘good place’ in which to do business.
Where the design and implementation of biodiversity offsets are established as an active and on-going
activity, businesses centred on the provision of offsets are likely to evolve. These industries can comprise new
companies set up explicitly to undertake offsets through habitat establishment and restoration and can also
allow existing companies such as those in the nursery trade and pest and weed control to expand their
activities. Governments appreciate that these activities can benefit the economy and local communities by
generating employment and revenue. For instance, the market for conservation banking in the US is
estimated at approximately US $1bn per annum3.
Biodiversity offsets generate additional private sector investments in conservation that add to the available
resources contributing to conservation by governments’ overall objectives for biodiversity conservation.
3 Madsen et al, 2010
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 8 of 41
Taken together, these advantages mean that biodiversity offsets offer not only a risk management tool and
potential business opportunity for companies, but a possible source of new and additional source of funding
for biodiversity conservation and sustainable use activities. In this model that provides for the internalisation
of environmental costs, public and private sector developers bear the costs of the conservation actions
needed to offset their impacts, and this investment in conservation may be considered additional to national
budgetary support for protected area networks and other in situ biodiversity activities.
However, biodiversity offsets should be treated with great caution: they should not be misused to allow
inappropriate projects to proceed, and are only appropriate in some circumstances, where the mitigation
hierarchy has been followed and the residual impacts are capable of being offset. Biodiversity offsets only
succeed where there is adequate capacity to design and implement them, and adequate monitoring,
evaluation and enforcement. In addition, it is important that national policy on biodiversity offsets results in
additional investment in conservation, and that government does not simply reduce public sector
commitments to conservation finance, transferring the costs of national conservation priorities to the private
sector. A number of publications illustrate the danger of inappropriate use of biodiversity offsets and
inadequate policy.
Some older and more biologically specialised components are more difficult to replicate or replace. There are
species whose habitat may be impossible to re-create and some compensatory measures may never
succeed4. The time scales required for restored sites to match the target state may be extremely long, in
some cases ranging from several decades to centuries5 .
There are also limitations on the metrics used to quantify losses and gains mainly reflecting the need to limit
their complexity in order to achieve a process that can be operationally practical6.Further, surrogate
measures of biodiversity can obscure what is exchanged, allowing loss of rare and difficult to conserve
biodiversity to be replaced by more commonplace biodiversity.
The likelihood that offset areas based on re-creation (for example revegetation) will follow a predicted
ecological path has also been questioned, given that outcomes can be influenced to some degree by
stochastic events7 .
Offset policies can also be compromised by inadequate implementation. Offset outcomes are heavily
dependent on the long-term management and protection of the offset site. Adequate standards, monitoring
and compliance are critical to success. Non-compliance can lead to significant failure rates for offsets8.
Sometimes the interests of agencies can be more aligned with those of development rather than the
environment, resulting in poor compliance and over-simplified biodiversity measurement.
Offsetting may fail to protect biodiversity due to the requirement for trading to use simple commodities or
units of trade and the inability of these to capture the complexities of biodiversity.9
4 Morris et al, 2006
5 Wilkins et al, 2003
6 McCarthy et al, 2004
7 Hilderbrand et al, 2005
8 Race and Fonseca, 1996
9 Walker et al, 2009
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 9 of 41
About this paper and BBOP
This paper is a contribution to the Business and Biodiversity Offsets Programme (BBOP)10
, a partnership of
over 50 leading organisations and individuals including companies, governments, conservation experts and
financial institutions from around the world working together to explore biodiversity offsets. The BBOP
Advisory Group members represent groups in society (government, business, intergovernmental
organisations, financial institutions, civil society) with diverse perspectives on environment and development
from many different countries. This paper is an initial draft prepared on behalf of the BBOP Secretariat by the
authors. It does not necessarily represent the views of the members of the BBOP Advisory Group. The
authors recognise that many of the issues presented are complex and will benefit from more in-depth and
detailed discussion. The main aim of the paper is to identify policy options at a general level in the
anticipation of subsequent papers based on further research and consultation.
The paper offers a basic introduction to biodiversity offsets policy, describing a range of options open to
governments and their advisers interested in establishing policy on biodiversity offsets. It draws on the
experience of governments that have already developed and implemented biodiversity offsets policies. It also
takes into account the practical experience of businesses in putting offsets into place on a voluntary basis,
including those undertaken in collaboration with BBOP as pilot projects. The paper examines the principles
underlying offsetting policy, identifies the various roles of government in offsetting schemes, looks at the
connections to other policy areas and considers the significant implementation issues.
Following this introduction, section 2 sets out the fundamentals of biodiversity offsets and biodiversity offset
policy, including the principles for best practice biodiversity offsets, the different approaches available to
governments when considering an offset scheme and the different policy options for biodiversity offsets.
Various ways of implementing offset policies, including through markets, are discussed.
Section 3 explores the possible roles for governments in developing and implementing policies on biodiversity
offsetting. The roles include those of policy maker, regulator, market maker, broker and monitoring and
compliance agency.
Section 4 looks at the ways in which biodiversity offsetting policy can be integrated with other policy areas
including: environmental impact assessment, strategic environmental assessment, industry policy and
whether offsets can be designed to offer multiple benefits (for instance, carbon and water).
Section 5 covers capacity issues, reviewing the requisite skills and resources a government may require to
establish a biodiversity offsets scheme. This section also discusses cost recovery for situations where
government services are provided.
Finally Section 6 looks at experiences in a range of situations around the world where biodiversity offsetting
has been attempted, in order to draw out the key lessons for success.
1.2 Definitions
Biodiversity offsets
Drawing on law, policy and experience around the world, the BBOP partners have defined biodiversity offsets
as measurable conservation outcomes resulting from actions designed to compensate for significant residual
10
http://bbop.forest-trends.org/
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 10 of 41
Box 1: The Mitigation Hierarchy
NB: This illustration shows a scenario where there is a residual impact to be offset. In other cases there may be no residual
impact left after avoidance, minimisation and restoration
adverse biodiversity impacts arising from project development after appropriate prevention and mitigation
measures have been taken. The goal of biodiversity offsets is to achieve no net loss and preferably a net gain
of biodiversity on the ground with respect to species composition, habitat structure, ecosystem function and
people’s use and cultural values associated with biodiversity.
A key part of the definition is that offsetting should only apply after developers have taken steps to avoid and
minimise the biodiversity impacts of their projects. Biodiversity offsets address any residual significant
impacts after the appropriate avoidance, minimisation and restoration. This is illustrated in Box 1.
Biodiversity offsets compared with compensation
Following four years of work and an analysis of the basis for biodiversity offsets in national and regional
policies around the world, BBOP agreed ten fundamental principles (see Box 3 on page 14) that define
biodiversity offsets, and these can be summarised briefly as follows. Biodiversity offsets are: designed and
implemented to achieve no net loss or a net gain of biodiversity; will achieve additional conservation
outcomes; adhere to the mitigation hierarchy; recognise limits to what can be offset; are planned in a
landscape context; involve stakeholders effectively in design and implementation; are designed and
implemented in an equitable manner; are planned to secure outcomes that last at least as long as the
project’s impacts and preferably in perpetuity; are undertaken and communicated transparently; and
document the appropriate use of sound science and traditional knowledge. Biodiversity offsets that follow
these principles should achieve the best outcomes for biodiversity and manage the risks associated with using
this tool. The principles are discussed further in section 2.1.
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 11 of 41
Essentially, there are two categories of response to projects’ impacts on biodiversity:
(a) Biodiversity offsets, which meet the definition and adhere to the principles above; and
(b) Compensatory conservation, which involves some investment in biodiversity conservation as a result of a
project, but does not satisfy these requirements. For instance, the compensation may only partially offset the
impact, involve some net loss, conserve a different kind of biodiversity to that affected in a manner that
doesn’t meet the ‘like for like or better’ approach to ecological equivalence, or not be secured for the long
term.
Market-based approaches: conservation banking and credits
Biodiversity is infinitely variable. Given the philosophy embraced in biodiversity offset policy all around the
world of ‘like for like or better’, the goal of ‘no net loss’ and the necessity for equity and respect for the rights
of indigenous peoples and local communities, biodiversity offsets are essentially a local and bioregional tool.
Biodiversity offsets are generally required and planned within the same bioregion as the area impacted, to
contribute to conservation of essentially the same biodiversity components and with a strong emphasis on
ensuring local communities’ needs are met. This means that biodiversity offsets are uniquely tailored to local
circumstances and cannot be traded internationally, unlike carbon, where there is a single, global metric and
unit (i.e. tonnes of carbon dioxide equivalent). Some countries establish conservation banking and designate
a set of biodiversity credits as a means of defining offset requirements. These generally define the ‘service
area’ within which credits can be purchased and traded, within a watershed or local bioregion and vegetation
class.
A developer can provide its own biodiversity offset, for example on land the developer owns. Alternatively, a
developer can enter into an arrangement with a third party for the provision of the required offset. These
arrangements are generally made by purchasing biodiversity credits from a conservation bank (usually
operated by a company), or from individuals and organisations that can provide biodiversity credits to the
requisite standard. The developer pays the third party an agreed price in return for the requisite number and
type of biodiversity credits that comprise the offset. Credits are quantified gains in biodiversity usually
generated by actions that increase the extent, quality or security of habitat or species.
A conservation bank is an area of land where biodiversity credits are established in advance of any actual
trading of credits for offsets. A conservation bank is thus an entrepreneurial project where an investor
establishes credits in anticipation of future sales. Conservation banks are usually large relative to the size of
the anticipated individual offsets. Banks have the characteristic of combining a number of individual offsets
onto a single site.
Thus national or local trading in biodiversity credits and the use of conservation banks represent one way of
implementing biodiversity offsets.
1.3 A brief history of biodiversity offsets.
Over 30 countries or states have enacted laws or introduced policies that specifically require biodiversity
offsets or compensatory conservation for particular sets of impacts (for instance, on wetlands, on certain
nationally listed species, or on biodiversity in its entirety)11
. In addition, biodiversity offsets or compensatory
conservation is sometimes included in the conditions for project approval as a result of dialogue between the
11
These countries include the USA, Australia, the European Union, Brazil and South Africa.
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 12 of 41
proponent of a project and the permitting authority, typically following an environmental impact assessment
process. There is also a small but growing incidence of companies undertaking biodiversity offsets voluntarily.
Research in 2010 by the Ecosystem Marketplace, a sister programme to BBOP at Forest Trends, found 39
existing compensatory mitigation programmes around the world, ranging from programmes with active
mitigation banking of biodiversity credits to programs channelling development impact fees to policies that
drive one-off offsets. (See Box 2.) There are another 25 programmes in various stages of development or
investigation. Within each active offset programme, there are numerous individual offset sites, including over
600 mitigation banks worldwide. The global annual market size is $1.8-$2.9 billion at a minimum, and the
market is likely much greater, as 80% of existing programmes are insufficiently transparent for the Ecosystem
Marketplace to have included their market size in this estimate. The conservation impact of this market
includes at least 86,000 hectares of land under some sort of conservation management or permanent legal
protection per year12
.
Box 2: Excerpt from State of Biodiversity Markets Report: Offset and Compensation Programs Worldwide,
by Madsen, Carroll and Moore Brands, 2010, Ecosystem Marketplace.
Some countries are in early stages of adoption or investigation of compensatory mitigation,* while others
have sophisticated and mature systems. But in all regions, compensatory mitigation is developed or
developing around unique economic, political, institutional, and cultural circumstances that give rise to a
variety of programmes.
In North America, biodiversity offset and compensation programmes are well-developed, particularly the US
wetland and species compensation programmes and Canada’s fish habitat compensation program. In total
there are 14 active programmes and 5 in development in North America. The region sees a minimum of
US$1.5-$2.5 billion in compensation payments per annum. This region also hosts the most offset credit banks
of any region in the world.
The United States has seven active programs and three in development. Payments total US$1.5-$2.4 billion
annually. Around 700,000 cumulative acres (283,280 hectares) have been restored or protected through US
programmes. The two largest offsetting programmes, wetland and species mitigation, offer three
mechanisms for achieving compensation: do it yourself, pay into a fund, or buy a third-party credit. Within
this third form of offset credit baking there are 615 active and sold-out banks in the country.
Canada’s compensation programmes are focused on fish habitat and wetland compensation, driven by a
combination of compliance with federal and provincial policies, with varying levels of implementation. Six
programmes exist in Canada, with one in development. These programmes cover five ecosystem/species
types and protect around 180 hectares per year. Regional investment totals $6-$145 million annually, and
there are currently 17 active and sold-out banks.
Offset programmes in Mexico are not as developed as those of its neighbours in North America. Yet, with
programmes compensating landowners for conserving forest cover and requiring payment for deforestation
due to industrial development, Mexico is well on its way to developing a sophisticated programme, ensuring a
more direct link between development impacts and biodiversity conservation.
Five compensation programmes exist in Central and South America, with two in development. Most South
American countries have developed Environmental Impact Assessment (EIA) laws that address impact
mitigation, including Brazil, Argentina, and Chile. However, the majority of Central and South America has not
developed biodiversity offset programmes. The exception is Brazil, with Colombia and Paraguay in the early
12
Madsen et al, 2010.
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 13 of 41
stages of development. These programmes have varying degrees of enforcement, market infrastructure and
institutional capacity.
There are currently no active offset programmes in Africa, but six are in development. South Africa is the
leader in African offset policy development, with a national and two provincial policies in the works. While
other countries have developed EIA law and some voluntary offset projects, the majority of the continent has
little in the way of offset and compensation programme creation.
In Europe, biodiversity markets are still a developing idea. Four programmes have had offsets implemented,
and an additional three programmes are in early stages of development. The largest European programme,
Germany’s Impact Mitigation Regulation, has at least 2,600 hectares conserved in compensation pools.
Habitat banking has been piloted in France and is under investigation in the United Kingdom and in the
European Union.
Four offset programmes exist in Asia, with another four in early development. Annual payments equal
US$390 million and roughly 26,000 hectares are protected or restored annually. Asian offset-like programmes
come mostly under the Environmental Impact Assessment, with EIA laws in Japan, South Korea, China,
Mongolia, Pakistan, Thailand, Malaysia, Russia and India. The presence of EIAs in the region may lay a
framework for biodiversity markets - two offset programmes/projects already in existence are located in
Malaysia and Saipan. In addition to government-led actions, voluntary and industry initiatives, driven by
increasing public criticism, are arising. At least one industry group has been exploring the use of biodiversity
offsets in the agricultural industry.
Between Australia and New Zealand, there are twelve biodiversity offset programmes and five in
development; the majority of those are compliance-based State or regional programmes implemented at the
project level during the planning process, although two programmes offer in-lieu fee payment. About US$1.3
million goes to regional payments annually, with 523 habitat hectares restored or preserved each year; there
are 42 ecosystem/species credit types in Australia’s offset programs.
Overall, our research shows significant activity around the world with many compensatory mitigation
programs in early stages of development. The global economic downturn of 2008 may have slowed market
growth in regions with developed mitigation systems, but they continue to see credit sales; while regions
without developed mitigation laws and markets are showing strong interest.
* In the State of the Biodiversity Markets Report, compensatory mitigation means the restoration, creation,
enhancement, and/or in certain circumstances preservation of natural resources for the purposes of
offsetting adverse impacts which remain after all appropriate and practicable avoidance and minimization has
been achieved. For the purposes of the SBM Report, compensatory mitigation represents a spectrum of
practices that range from rigorous and measurable biodiversity offsets to less direct efforts to compensate for
impacts through financial donations and land protection.
Wetland and conservation banking has been a feature of biodiversity policy in the USA for at least three
decades, while biodiversity offsets and credit trading are comparatively new in Australia and Brazil. In other
countries, such as South Africa, policy is already under development, and in a suite of other countries (e.g.
Ghana, Uganda, Namibia, Vietnam, Malaysia, Mongolia) work is just starting.
Historically, the nature and scale of biodiversity offsets or compensatory conservation were calculated based
on simple metrics such as area, the financial investment involved in the investment project, on some formula
that identifies a subset of biodiversity values (timber value on the land, for instance), or simply negotiated as
a financial package that the developer was prepared to invest, irrespective of whether the amount was
adequate to cover the costs of sufficient offsetting activities. However, the last 10-15 years have seen a
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 14 of 41
growing interest in better metrics that endeavour to assess the nature, amount and quality of biodiversity lost
as a result of the project and gained through the offset and to ensure properly quantified approaches to ‘no
net loss’. Recent metrics generally represent a combination of area and quality or condition of biodiversity.
Some assess particular functions of biodiversity and others look at species viability assessments. Many
assessment methods and different metrics exist worldwide. For example there are about 40 different
wetland assessment methods in the United States.13
2. The basics of biodiversity offset policy
2.1 The basic principles of biodiversity offsets
Some core principles of biodiversity offsetting: objective, metrics and additionality
National laws and circumstances vary widely around the world, so there is no single ‘correct’ approach to
designing and implementing a biodiversity offset, or to introducing national policy and regulation on this
topic. In recognition of this, the Business and Biodiversity Offsets Programme has developed a set of basic
principles that provide a framework for best practice biodiversity offsets. Provided these principles are
adhered to, there is tremendous flexibility and any number of different ways in which biodiversity offsets can
be designed and implemented and their success verified. These ten principles are shown in Box 3, below.
The foundation of a biodiversity offsets policy is the requirement for no net loss of biodiversity. The most
basic objective of offsetting policy is that losses are mitigated by commensurate gains. Biodiversity value that
already exists does not represent a gain and hence cannot provide an offset.
BBOP’s definition of offsets includes reference to ‘no net loss of biodiversity on the ground with respect to
species composition, habitat structure, ecosystem function and people’s use and cultural values associated
with biodiversity.’ A policy statement on no net loss will generally specify the values to which the policy
applies. The key to implementing a no net loss policy is to specify units by which changes in these values can
be measured. Given the complexity of biodiversity and its different aspects, such as species composition,
habitat structure and ecological function, these metrics are usually surrogate measures, aimed at capturing
some crucial elements of the overall value while keeping the measurement task relatively simple and cost
effective. Nevertheless this is a difficult task as surrogate measures can involve problems of scaling and lack
of transparency. These issues are not well understood and require further research.
Most biodiversity has been affected by human activity to some degree or other. The condition, quality and
amount of biodiversity vary enormously, even within the same habitat type. One hectare may be pristine,
with high levels of diversity and functionality, and another hectare of the same type may be highly degraded,
depauperate and with few of its ecological functions intact. Because of this variability, area alone makes a
poor measure of biodiversity, and loss and gain metrics often include a quality component.
Biodiversity offsets involve exchanging a residual biodiversity loss at one place for a biodiversity gain at
another place. An important part of a policy is to define the ‘rules’ of this exchange process, usually referred
to as the’ like-for-like-or-better’ criteria. The biodiversity in one place is never exactly the same as the
biodiversity in any other place, so setting like-for-like criteria becomes an exercise in categorising biodiversity
into classes or types within which exchange will be permitted. The design tension here is that high resolution
classification with many but small types can provide a closer match between the loss and the gain, but also
introduce less flexibility into the offsetting process, so it is more difficult to locate a matching offset.
13
Salzman and Ruhl, 2005
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 15 of 41
Box 3: Principles on Biodiversity Offsets, developed and supported by BBOP Advisory Group members
Biodiversity offsets are measurable conservation outcomes resulting from actions designed to compensate for
significant residual adverse biodiversity impacts arising from project development1after appropriate prevention
and mitigation measures have been taken. The goal of biodiversity offsets is to achieve no net loss and preferably
a net gain of biodiversity on the ground with respect to species composition, habitat structure, ecosystem
function and people’s use and cultural values associated with biodiversity.
These principles establish a framework for designing and implementing biodiversity offsets and verifying their
success. Biodiversity offsets should be designed to comply with all relevant national and international law, and
planned and implemented in accordance with the Convention on Biological Diversity and its ecosystem approach,
as articulated in National Biodiversity Strategies and Action Plans.
1. No net loss: A biodiversity offset should be designed and implemented to achieve in situ, measurable
conservation outcomes that can reasonably be expected to result in no net loss and preferably a net gain of
biodiversity.
2. Additional conservation outcomes: A biodiversity offset should achieve conservation outcomes above and
beyond results that would have occurred if the offset had not taken place. Offset design and implementation
should avoid displacing activities harmful to biodiversity to other locations.
3. Adherence to the mitigation hierarchy: A biodiversity offset is a commitment to compensate for significant
residual adverse impacts on biodiversity identified after appropriate avoidance, minimization and on-site
rehabilitation measures have been taken according to the mitigation hierarchy.
4. Limits to what can be offset: There are situations where residual impacts cannot be fully compensated for by a
biodiversity offset because of the irreplaceability or vulnerability of the biodiversity affected.
5. Landscape Context: A biodiversity offset should be designed and implemented in a landscape context to
achieve the expected measurable conservation outcomes taking into account available information on the full
range of biological, social and cultural values of biodiversity and supporting an ecosystem approach.
6. Stakeholder participation: In areas affected by the project and by the biodiversity offset, the effective
participation of stakeholders should be ensured in decision-making about biodiversity offsets, including their
evaluation, selection, design, implementation and monitoring.
7. Equity: A biodiversity offset should be designed and implemented in an equitable manner, which means the
sharing among stakeholders of the rights and responsibilities, risks and rewards associated with a project and
offset in a fair and balanced way, respecting legal and customary arrangements. Special consideration should be
given to respecting both internationally and nationally recognised rights of indigenous peoples and local
communities.
8. Long-term outcomes: The design and implementation of a biodiversity offset should be based on an adaptive
management approach, incorporating monitoring and evaluation, with the objective of securing outcomes that
last at least as long as the project’s impacts and preferably in perpetuity.
9. Transparency: The design and implementation of a biodiversity offset, and communication of its results to the
public, should be undertaken in a transparent and timely manner.
10. Science and traditional knowledge: The design and implementation of a biodiversity offset should be a
documented process informed by sound science, including an appropriate consideration of traditional knowledge.
This dilemma can be eased by grading the like-for-like-or-better criteria according to some measure of the
significance of the biodiversity components suffering the impacts. Thus the like-for-like criteria for a very
significant biodiversity component may be set such that a close match is required for the offset while for
lower significant losses the criteria may be quite flexible, allowing exchange within a wider range of
biodiversity types, or higher conservation value.
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 16 of 41
Box 4: Introduction to the concept of ‘gain’ in biodiversity offsets:
‘Gain’ is an increase in the extent and/or quality of biodiversity. Three categories of gain can be distinguished –
improvement gain, maintenance gain and security gain. It is useful to distinguish these types of gain because
they arise from different actions and commitments. Commitments to undertake such activities may be made by
different parties, so the categorisation allows the overall gain to be calculated, and parts of it attributed to
separate parties.
• Improvement Gain results from management commitments beyond existing obligations under legislation to
improve the current habitat condition. Typical actions leading to an improvement gain include reducing or
eliminating weeds, enhancement planting or the reintroduction of fauna species.
• Maintenance Gain results from commitments that contribute to the maintenance of biodiversity quality and
condition over time (i.e. avoiding any decline). It includes foregoing entitled activities that could otherwise
damage or remove biodiversity, such as grazing or firewood collection1.
• Security Gain results from actions to enhance the security of biodiversity (i.e. avoiding loss through clearing
or conversion), either by entering into an on-title agreement, by transferring private land to a secure public
conservation reserve or by upgrading the protected status of public land. (Just as a decision to elevate the
security arrangements for a site can generate security gain, a decision that increases the risk of loss through
clearing could be considered to generate a security loss.)
Metrics for gain can include area, combined area and condition, population levels of particular species and
species persistence. The calculation of security gain and loss requires estimates of the long-term risk of loss of
vegetation through clearing under the different security arrangements available in the jurisdiction. In any given
offsetting scheme, the gains and losses are measured in the same units.
For more information on the calculation of loss and gain, see the Biodiversity Offset Design Handbook Step 5*,
and its Appendices** that describe a number of different metrics and methods for loss/gain calculations.
* www.forest-trends.org/biodiversityoffsetprogram/guidelines/odh.pdf
** www.forest-trends.org/biodiversityoffsetprogram/guidelines/odh-appendices.pdf.
The exchange process inherent in biodiversity offsets (i.e. the approximation of ‘like-for-like’) means that the
metrics used to measure losses and gains must be capable of providing equivalence between different
biodiversity components.
This type of like-for-like-or-better design also allows the introduction of an arrangement that provides further
flexibility while at the same time allowing a biodiversity benefit. ‘Trading up’ refers to the ability to match a
loss with a gain in a different kind of biodiversity, provided that it is of higher conservation value than the loss.
It is important that the level of segmentation of biodiversity types, and the ‘trading up’ options (for
biodiversity types of higher conservation value), are primarily based on conservation drivers rather than on
the convenience of locating matching offsets.
Like-for-like-or-better policies can include the following criteria:
o Type of biodiversity component(e.g. vegetation type, habitat type, species type)
o Vicinity (where the offset can be located e.g. within the same bioregion)
o Timing (to address time gaps between the impact and the offset)
o Ecological function
o Quality or condition requirement
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 17 of 41
For example the like-for-like rules may allow the clearing of an area of grassy woodland to be offset by gains
in an area of lowland forest through a trading up provision, provided the grassy woodland is generally well
conserved within its bioregion and the lowland forest is a higher conservation priority.
To be effective, biodiversity offsets need to be secure and in place for as long as the loss exists. Often the loss
is permanent meaning that the offset must also be permanent. In jurisdictions where private property rights
are well defined and protected area legislation is in place, security and permanence can usually be established
through the use of legal devices such as covenants, easements and new conservation reserves. In other
circumstances, for example where customary land is found, more innovative approaches, such as long-term
agreements with communities, will be required.
An important factor in the development of biodiversity offset policy is the underlying body of biodiversity
information. A biodiversity offset scheme is reliant on the information base in a number of ways including:
o To inform the measures of loss and gain
o To enable categorisation of biodiversity significance (priorities)
o To enable the like-for like-or-better exchange
Typically the basic information required for biodiversity offsets includes the extent and type of ecosystems,
biotopes or habitats, their quality or condition, conservation status (e.g. ‘threatened’), evolutionary
significance/ centre of endemism, migratory or aggregatory species records and ranges/distributions, and
species’ habitat requirements. Some information is required at a regional scale to provide context (for
example in order to consider the relative significance of a site, importance of connectivity and corridors in the
landscape, priority areas for protection or protected area expansion, etc.), while some may be collected at a
site level. In addition, information on national or regional conservation plans, strategies and priorities is
invaluable in focusing offset efforts. Information on the cultural and use values of biodiversity is also
important.
Where the available biodiversity information is relatively limited, a biodiversity offsets policy can still be
implemented, but its complexity will reflect the nature of the information.
2.2 Different kinds of offsets
There are broadly two kinds of biodiversity offsets or compensatory conservation:
(a) Voluntary biodiversity offsets or compensation, which a developer undertakes in circumstances
where there is no legal requirement to do so, because it perceives a business advantage (such as
license to operate, reputational benefits, competitive advantage, market share, etc); or
(b) Regulatory biodiversity offsets or compensation, which are required by law.
Biodiversity offset policy can be implemented in several different ways at a country or state level. In some
cases the initiative for offsetting may be left to the private sector, as a voluntary choice (see option (a),
above). In other situations (option (b)), a government may choose to support the private sector with official
policy, which may offer incentives or set out requirements for biodiversity offsets for certain activities or
impacts. Each of these approaches will be discussed in turn.
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 18 of 41
Voluntary offsets
Companies may choose to undertake biodiversity offsets voluntarily, based on a business case. Voluntary
offsets are part of corporate responsibility and good environmental practice and can help to secure a license
to operate. Good working relationships with government and local communities can save companies time
and money through early permit approval. Many large banks place biodiversity conditions on their loans for
development projects. These and other elements of the business case are summarised in Box 5.
While it is perfectly possible for companies to undertake voluntary biodiversity offsets in the absence of any
formal government intervention, some government policy can be very beneficial. As a minimum such policy
can address:
o General recognition of the benefits of biodiversity offsetting;
o General statement of support for companies to undertake voluntary offsets;
o Facilitation of access to biodiversity information;
o Government willingness to consult with companies on the facilitation of voluntary biodiversity
offsets.
Box 5: The business case for voluntary biodiversity offsets
A company’s biodiversity impacts can lead to significant regulatory, financial and reputational risks.
Governments, financial institutions, and civil society increasingly expect developers to take full responsibility
for such impacts. In many cases, biodiversity offsets offer companies a way to demonstrate no net loss of
biodiversity, improve outcomes for local communities, and reduce operational and project development risks.
Companies voluntarily developing biodiversity offsets forge good relationships with regulators and
stakeholders, which can contribute to securing permits and broader social license to operate. Adherence to
internationally recognized best practice principles (e.g. those developed by BBOP), can help businesses build
their reputations as leaders, manage biodiversity-related risks, and shape the regulatory requirements
increasingly being developed by governments.
Elements of the business case:
License to operate and regulatory goodwill; managing risk and liability; strengthening reputation:
Designing and implementing high quality biodiversity offsets can help companies work effectively with local,
national and international stakeholders. Showing efforts to achieve no net loss of biodiversity improves a
company’s reputation and reduces anti-project sentiments and project risk. Adopting best practice helps
streamline permit approval, thereby lowering the risk of project delay and significant unanticipated start up
and operational costs.
Operational efficiency and cost savings: Biodiversity offsets may provide a more cost-effective solution than
a sole focus on on-site mitigation measures. By working through a structured approach to avoidance,
minimisation, restoration and offsets, companies may reduce overall costs while achieving greater
conservation results. Companies with good relationships with regulators and local communities will also enjoy
the financial benefits of operational efficiency, avoiding the costs associated with revoked licenses or
blockaded facilities.
Access to finance: Companies seeking project finance from the International Finance Corporation, or from
the more than 60 major banks that have subscribed to the Equator Principles, are encouraged to consider
biodiversity offsets. Applying best practice can help developers secure credit and investment.
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 19 of 41
Competitive advantage: Through voluntary adoption of best practice on biodiversity offsets, companies can
distinguish themselves from competitors who may be bidding for the same licenses or seeking market share.
Leadership companies position themselves favourably in an environment where regulator and financier
expectations are increasing and competitive advantage may be necessary to win concessions, attract finance
and gain market share.
Shape policy: Companies undertaking biodiversity offsets gain ‘first mover’ advantage and a seat at the table
where national policy and international best practice standards on biodiversity offsets and compensation are
being developed. They can contribute to the international adoption of policies that work well for business.
Standards: Adopting voluntary standards helps companies demonstrate the quality and effectiveness of their
biodiversity offsets, which helps avoid controversy and uncertainty. BBOP is working with as many
stakeholders as possible to develop (by 2015) standards on biodiversity offsets that enjoy broad societal
support.
Policy and incentives
Under this approach a government would develop a policy aimed at positively encouraging biodiversity
offsetting within its jurisdiction. Such a policy would often be part of a broader biodiversity conservation
policy that could also include provisions such as setting aside protected areas and the development of plans
for the protection and recovery of threatened species.
An offsetting scheme can be introduced in the absence of highly detailed biodiversity information systems as
long as there is sufficient information to enable these mechanisms to function in even a basic way. As time
goes on, the information base can be improved and the offsetting mechanisms can be enhanced accordingly.
Beyond the basic biodiversity informational needs for offsetting policy (such as data and mapped
classifications of biodiversity, biodiversity condition, threatened species records, and species’ habitat
requirements) , broad land use plans that include biodiversity conservation can be helpful where there is an
objective to locate and aggregate offsets strategically at the landscape scale.
In addition to setting out objectives and core principles, biodiversity offset policy usually addresses the
requirement for technical standards and methodologies. The policy may not contain these standards and
methodologies, but would generally at least establish the processes by which these subsidiary documents will
be prepared and authorised. Typical subjects for these documents are:
o Methods for measuring losses and gains
o Standards for habitat management
o Standards for habitat re-creation
o Methods for classifying biodiversity components by significance
As part of a biodiversity offsetting policy a government may choose to offer incentives for developers to
implement offsets according to the policy. These incentives can influence the business case through factors
such as an enhanced case to government for project approval, facilitated access to government-held
biodiversity information and assistance with local community relations. Alternatively, more direct incentives
such as tax breaks and development bonuses could be offered within the policy framework.
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 20 of 41
An incentive policy could also extend to facilitating third party offsets for developers. This facilitation could
include assistance with finding areas that meet to like-for-like criteria, helping with landowner negotiations
and addressing any associated land use planning issues.
Regulatory approaches
Under regulatory approaches, biodiversity offsets are made mandatory for certain defined activities or
impacts. Regulatory approaches are generally introduced in circumstances where the government concerned
recognizes that ongoing biodiversity losses are unsustainable and are compromising the integrity of natural
resources and the community benefits flowing from these resources. The aim of regulatory approaches is to
provide a response to biodiversity losses within the jurisdiction that sets a level playing field for all entities
with impacts on biodiversity, introduces clarity and legal certainty on their rights and responsibilities and
achieves a greater and more consistent biodiversity outcome than will occur through purely voluntary
approaches.
The regulatory requirement for biodiversity offsets is usually integrated into the development approval
processes. Development approval processes can include environmental impact assessments, land use
planning laws and legislation covering permitting for specific industry sectors such as exploration and
development within the extractive sectors. The availability of an offset should not be seen as an automatic
green light of approval, regardless of the significance of the impacts. Furthermore the unavailability of an
appropriate offset may in some cases be sufficient reason to modify or reject a proposal.
The standards and methodologies that back up offset policy can be given a statutory basis in a regulatory
approach. In most cases this is done by a basic and very simple reference to the requirement for offsets and
‘no net loss’ within the governing law, so that policy or guidance documents can be prepared and amended
from time to time through an administrative process without constant recourse to Parliament. This allows
improvements to standards and techniques to be incorporated without the necessity of amending the original
legislation.
2.3 Different kinds of policy and legal provisions on offsets
The different kinds of regulation
Governments can introduce biodiversity offsetting policy and regulation in two basic ways. The first is
through specific provisions on biodiversity offsets (and perhaps other aspects of biodiversity conservation)
and the second is to incorporate offsetting provisions into other laws and policies that deal with environment
impact assessment (EIA), land use planning, strategic environmental assessment, sectoral policies or broader
sustainable development or environmental policies.
The decision on which approach to take depends to some extent upon the legal customs of the jurisdiction
concerned, and also upon the scope of the other laws relative to the intended scope for biodiversity offset
requirements. For example, in a particular jurisdiction the EIA laws may only cover large projects or projects
in particular industry sectors (for instance, construction and extractives, but not agriculture). If the intention
is to introduce offsetting for a wider range of projects, it may be necessary to introduce a specific law
requiring offsets for the desired scope.
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 21 of 41
2.3.1 Specific policy and law on biodiversity offsets.
Biodiversity offset regulation will generally deal with the main matters of offsetting policy as discussed above,
either directly or through incorporation by reference. Other provisions that are often included in these laws
include:
Exemptions for certain impacts on the basis that they are very small, the biodiversity is highly degraded or for
safety and hazard reduction reasons;
o Situations of temporary loss of biodiversity such as sustainable timber harvesting;
o Reference to entitled or customary uses that do not require approval and hence are outside the
offsetting regime;
o Reference to provisions that establish a ‘duty of care’ to the environment (such as the control of
pests and weeds as such fall below the additionality requirement.
2.3.2 Integrating provisions on biodiversity offsets into impact assessment, planning requirements and
other relevant policy and law
There are many different frameworks for biodiversity offset policy and law, depending upon the existing
institutional and legal arrangements prevailing in the jurisdiction. The most common settings for biodiversity
offset policy are EIA, SEA, planning law, sectoral law and as part of a suite of environmental offset policies. In
some cases, biodiversity offsets may be included in broader policy frameworks established to promote
sustainable development.
Biodiversity offsets and EIA
In many countries, Environmental Impact Assessments (EIAs) provide the necessary framework for
governments to negotiate biodiversity offsets with developers, particularly for larger scale projects. In others
where EIA is not a regulatory tool, or where activities having a significant negative impact on biodiversity do
not trigger the need for EIA (typically small projects in some countries), other approaches would need to be
used. BBOP has prepared a resource paper on biodiversity offsets and impact assessment that offers more
detail than this short summary.14
From a company’s perspective, a project’s final design and associated environmental management plan is
generally linked to issues and risks identified during the EIA. However, in order for the EIA to act as a trigger
for biodiversity offsets, the requirements of the EIA system itself need to be robust and transparent: to
ensure that the full mitigation hierarchy is followed; that there is a reliable measure of residual impacts on
biodiversity and their significance; that biodiversity offset negotiations take place with stakeholders; and that
realistic and practicable offset proposals are prepared. Offsets should not be seen as attempts by the
developer to ‘buy-off’ officials.
There are some challenges to integrating consideration of biodiversity offsets within the EIA process:
depending on the available information, EIAs may need to be conducted on a timescale that does not
synchronize with the biodiversity being studied. For instance, it may take more than a year to understand
potential seasonal impacts and to consider which aspects of a site’s biodiversity are priorities for conservation
14
http://bbop.forest-trends.org/guidelines/eia.pdf
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 22 of 41
efforts. By contrast, EIAs are often completed within a period of six to nine months. In addition, some
conservation organizations have expressed concerns that, since EIAs are usually paid for and approved by the
companies causing the environmental damage, they may underestimate the damage caused or the offsets
needed to compensate for the damage.
However, from an efficiency perspective, and where EIAs are required by law, it can make very good sense
from the company, stakeholder and government perspectives to integrate biodiversity offsets with regulatory
requirements. However, for ‘good practice’, it is important to ensure that:
• EIA or its supporting policy framework includes targets to achieve ‘no net loss’ of biodiversity,
translated into country and context-specific indicators
• EIA requires the avoidance and minimization steps for all impacts on valued biodiversity.
• EIA requires that significant residual impacts are offset.
• EIA should address all components of biodiversity affected, including ecological and evolutionary
process and functional aspects
• EIA should address the use of cultural values of biodiversity to affected parties.
• EIA needs to consider impacts beyond the site boundaries, at the landscape scale.
• EIA needs to address indirect and cumulative impacts.
• EIA should evaluate the effectiveness and risks of proposed measures to minimize and restore/ repair
impacts; that is, it must provide a reliable measure of residual negative impacts on biodiversity.
An offset can be integrated with the EIA process to deliver ‘no net loss’, provided that the above
requirements are met. Details about implementation of the proposed offset should then be incorporated in
an environmental management plan (‘offset management plan’) or Biodiversity Action Plan.
Biodiversity offsets and SEA
The purpose of Strategic Environmental Assessment (SEA) is to ensure that the environmental consequences
of a proposed policy, plan or programme are appropriately addressed at earlier stages or higher tiers of
planning and decision-making than would take place for a project through EIA. Governments can use SEA to
establish an analytical framework for assessment of individual project proposals through EIA or other
planning processes in a hierarchical model that sets objectives through policy making and planning, and
assesses alternative development options, cascading down to the level of project planning and EIA. SEA may
draw on results of other landscape level planning initiatives that might clarify biodiversity, conservation and
development objectives and provide a platform for comparing alternative development scenarios and their
compatibility with these objectives. Individual projects can then be designed to meet policy goals and plan
objectives. When planning for biodiversity offsets, a tiered system like this, especially if backed up by
comprehensive spatial data on the distribution and significance of biodiversity and priority areas for
biodiversity conservation in the landscape, can make it much easier to determine how biodiversity offsets
might complement policies and contribute to national or regional conservation objectives.15
Biodiversity offsets and planning law
In many countries, the planning process, with its formal system of applications and enquiries, offers another
potential trigger for dialogue on biodiversity offsets between developers and regulators. Indeed,
environmental and social works are often required as a condition for planning approval, or as a form of
15
Further information about SEA and biodiversity offsets may be found in http://bbop.forest-trends.org/guidelines/eia.pdf
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 23 of 41
‘planning gain’. For instance, in the UK, section 106 of the Town and Country Planning Act can be used by
authorities to require developers to undertake compensatory conservation activities. Just as with EIAs, certain
underlying conditions may be needed for this trigger to work successfully, such as clear guidelines, tax breaks
and density bonuses.
Biodiversity offsets and sectoral policies (mining, oil and gas, fisheries, etc)
Policy on biodiversity offsets can be incorporated into national policy relating to particular industry sectors.
This could be done with a view to establishing the offset policy within a sector that was anticipated to
generate significant biodiversity impacts, or where the nature of the industry sector required particular policy
approaches that would not be appropriate for a policy applying to developments generally. Biodiversity
offset provisions can thus be integrated into sectoral law and policy concerning, for instance, oil and gas;
mining; electricity supply; forestry; fisheries; palm oil and other agricultural sectors; and tourism.
Biodiversity offsets and other environmental offsets (e.g. carbon, water, social issues) and Payments for
Ecosystem Services
Governments may have policies that provide for offsetting a range of environmental impacts. Some
governments (such as Western Australia and Queensland) have a broad, encompassing policy on
‘environmental offsets’. Such policies may have subsidiary programmes on particular types of offsets. Other
governments may introduce one or more thematic offset policies (e.g. biodiversity offsets, carbon offsets,
wetland offsets and even social offsets) without an overarching environmental offsets policy. Other
governments have Payments for Ecosystem (PES) Schemes16
. These schemes may involve a variety of
different credits.
In any of these cases, questions will naturally arise as to whether biodiversity offsets and other types of offset
or PES schemes can co-exist, and particularly whether there can be an ‘overlay’ of more than one scheme on
the same piece of land. Generally speaking, two mechanisms for coordinating such different schemes have
been considered, known as ‘bundling’ and ‘stacking’.
‘Bundling’ refers to regulatory arrangements where credits from a single site are defined to include more than
one environmental good or service. Thus a credit might be defined that incorporates both biodiversity gain
and sequestered carbon from a revegetation site. ‘Stacking’, on the other hand, refers to arrangements
where different and distinct types of credits can be generated from a single site. In the example above,
separate biodiversity credits and carbon credits would be available for offsets from the revegetation site.
Bundling and stacking remain controversial concepts, with concerns raised about ‘double dipping’17
, site
management incompatibilities and contractual conflicts. A very important topic for consideration is how the
16
The Economics of Ecosystems and Biodiversity (TEEB, 2009) study defines ecosystem services as the ‘direct and indirect
contributions of ecosystems to human well-being’ and categorises them into regulating (e.g. water purification, carbon
sequestration, flood attenuation); provisioning (e.g. food, fuel, freshwater, timber); cultural services (e.g. for spiritual and
aesthetic benefits); and habitat (e.g. maintenance of genetic diversity). Note that ‘supporting services’ are incorporated under
ecological processes, rather than as a category of ‘services. The Millennium Ecosystem Assessment (2005) defines four
categories of ecosystem services: Provisioning services: The goods or products obtained from ecosystems such as food,
freshwater, timber, fiber and other goods. Regulating services: The benefits obtained from an ecosystem’s control of natural
processes such as climate, water flow, disease regulation, pollination and protection from natural hazards. Cultural services: The
non-material benefits obtained from ecosystems such as recreation, spiritual values and aesthetic enjoyment. Supporting
services: The natural processes such as erosion control, soil formation, nutrient cycling, and primary productivity that maintain
other services. 17
Double dipping is when the person generating the credit(s) sells the same conservation management intervention to different
buyers.
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 24 of 41
‘additionality’ needed for a biodiversity offset (and indeed for most other types of offsets) can be ensured.
Policy development on ‘bundling and stacking’ is still in its infancy, and many of the related issues remain to
be resolved. BBOP’s Guidelines Working Group is exploring this topic.
2.4 Ways of implementing biodiversity offsets
The discussion thus far has considered the basics of biodiversity offsetting and the main policy options for
government seeking to implement an offsets arrangement. These considerations have focussed on the
processes for specifying biodiversity offsets in relation to defined impacts. However, specifying an offset in
terms such as size, type, quality and locality is only half of the task. The next challenge is for the developer to
discharge the obligation to implement the offset. There are three main approaches to this task of
implementing biodiversity offsets: developer-initiated, in lieu fees and market mechanisms. Whichever
approach is used, it will need to address key considerations such as identifying roles and responsibilities in the
governance, management, monitoring and enforcement of the offset; how risk is assigned; and how the long
term security of the offset is assured through legal and financial arrangements. These issues are discussed a
little further in section 3, and are also the subject of BBOP’s ‘Offset Design Handbook’18
.
Developer initiated offset implementation
In this approach, while government may have introduced policy that encourages or requires biodiversity
offsets, it generally takes a non-interventionist stance on how offsets should be implemented, and particularly
on the task of finding offsets. The onus rests with the developers to find their own offsets (whether the
offsets themselves are voluntary or required by regulation). This method can be ineffective in terms of offsets
and unpopular with developers for a number of reasons:
o Identifying and securing appropriate offset areas is often outside the core expertise of developers,
particularly smaller companies;
o It can be a time- and resource-consuming task;
o Projects or companies may ‘move on’ before an appropriate offset has been located.
In lieu fees
Under this system a government agency stipulates a payment from the developer with the intention of
deploying the funds at a later date to find a suitable offset. This approach is often favoured by developers
because their offset requirements can be resolved quickly and with certainty through a single payment which
sheds their liability for the offset. In lieu fees can allow aggregation of individual offsets into larger, more
beneficial areas. However from a broader perspective in lieu fees have a number of disadvantages including:
o The risks associated with finding the offset are not reduced but merely transferred from the
developer to the government agency;
o The agency is required to estimate the cost of the future offset at the time of the in lieu payment. As
this cost is not accurately known, the estimate will be either too low (in which case the agency will be
short of funds to implement the offset), or too high (in which case the developer has paid an
excessive fee).
18
BBOP Biodiversity Offset Design Handbook. 2009. http://bbop.forest-trends.org/guidelines/oih.pdf
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 25 of 41
o In lieu fee schemes can accumulate large funds over time. In practice the tendency is for the
implementation of offsets to be incomplete and sometimes for the funds to be diverted away from
biodiversity offsetting to other ‘good environmental causes’.
Market mechanisms
Markets can be used to supply biodiversity offsets for developers. These markets do not usually develop
spontaneously, but require government intervention to set up the key components. Properly designed and
operated, markets can be very effective in supplying offsets in a timely and cost-effective manner. However,
biodiversity offset markets are subject to all the traps and limitations of markets everywhere.
However offset markets have some unusual characteristics which challenge general economic thinking about
markets. Thus the primary purpose of an offset market is as a tool for effectively supplying biodiversity
offsets as part of a biodiversity conservation policy. Market efficiency is an important but secondary goal.
Furthermore there is no aspiration to expand the offset market for its own sake. After all every offset is
associated with a commensurate biodiversity loss and the overarching policy objective is the reduce impacts
on biodiversity. Thus for no net loss biodiversity offsetting there is no biodiversity benefit from more
offsetting and a larger offset market.
2.5 The design of offset markets
2.5.1 First party and third party offsets
In some circumstances a developer can provide a biodiversity offset on their own land. In this case the
developer takes on the responsibility for the establishment, management and ongoing protection of the
offset site. This situation is sometimes referred to as a first party offset. However many developers are
reluctant or unable to provide their own offset because:
o They do not own the appropriate land or biodiversity components on which a suitable offset can be
based;
o They lack the capacity and expertise required to establish and manage land and biodiversity;
o Their project has a fixed term and they do not want to be committed to ongoing obligations
associated with the project’s offset.
The alternative is to reach agreement with another person or company to provide the biodiversity offset – a
third party offset. This is the basis for the offset market, demand for offsets from developers and supply of
offsets by other landowners.
The basic elements for an offset market are units of trade (credits), trading rules and credit registers.
2.5.2 Biodiversity credits
Offsetting is a balancing of loss and gain and credits are units of gain that can be traded in an offset market.
The key consideration for the utility of credits is that they meet all the requirements for gain as specified in
the offset policy of the jurisdiction. So, for example credits are measured using the same units used for
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 26 of 41
measuring the gain. If the gain is required to be ongoing, then credits must also be permanent. Generally
whatever standards and processes apply to the establishment, measurement and protection of gain must also
apply to the credits.
However credits have some characteristics over and above their correspondence to gain. Credits are bought
and sold in the offset market so they also property. There can be some uncertainty about the status of credits
as property in some jurisdictions because biodiversity (and other types of credits) are novel and untested. It
can be beneficial to formally establish biodiversity credits through legislation to remove any uncertainty.
Such uncertainty can undermine confidence in the market if buyers and sellers are unsure about exactly what
rights they are exchanging in a credit trade. Governments can engender confidence in the offset market by
establishing biodiversity credits in law. Clear land tenure is critical for the satisfactory operation of operation
of offsets in general, and clear property rights for credits similarly important for market based approaches to
their implementation.
While it is useful to legally recognise credits as property it is important to restrict their use to the function of
providing offsets or for contributing to biodiversity conservation more generally. Credits should not be able
to be used for security for debt as this could compromise the ‘secure and ongoing’ requirement where they
are used as biodiversity offsets.
Because biodiversity credits are designed to implement and deliver biodiversity offset requirements, they
need to be fit for this purpose. This implies that credits need to comply with the policies and standards that
apply to offsets themselves. Compliance with these requirements can be achieved in a number of ways
including through industry standards and government-operated registers. These standards serve to minimise
the risk to the environment arising from poorly performing offsets and also provide certainty to developers
that in purchasing the credits they have responsibly discharged their commitment to the provision of the
offset.
2.5.3 Trading rules
In addition to clarifying the property status of credits, governments can also facilitate the offset market by
formulating trading rules. These rules generally specify the processes and limitations on trades and can
include rules that address:
o Recognition of processes and standards for establishing and cancelling credits;
o Proof of ownership of biodiversity credits;
o Process for the change of ownership of credits;
o Processes for extinguishing credits that have been used in an offset;
o Accounting where biodiversity credits with different metrics or management can coexist on the one
site.
The issue of accounting for different credits on the one site can arise where the offset policy requires more
than one measure of biodiversity to be included in the loss and gain consideration, for example where there is
a general measure for habitat and another measure for a particular species. In this example offsets will
comprise various combinations of the two measures. The task of compiling third party offsets is greatly
facilitated if the two types of credits can be traded independently. However if there is any crossover in the
metrics for the two credits (for example the trees may be part of the habitat measure as well as being a
measure in their own right), there needs to be a rule to cover the separation (unbundling) of the two credit
types and for taking into account any double counting of gain.
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 27 of 41
More broadly where there are separate management plans for different types of credits, these also need to
be examined (for example biodiversity and carbon). It may be that the measures of the benefits are fully
separate, but the actions in one management plan have a (negative) impact on one or more of the metric
components of another benefit. In this case the interaction is not through common metric components in the
measures, but through management actions that have impacts on more than one measure.
2.5.4 Biodiversity Credit registers
Biodiversity credit registers are another important component of an offset market. Registers serve two main
functions:
o To be the authoritative record of the number, location, characteristics and ownership of biodiversity
credits in the jurisdiction;
o To provide quality assurance for the registration (creation) of credits.
Registers usually provide the documentation for ‘proof of ownership’ and guard against ‘double-dipping’
(inappropriate bundling and stacking) by recording credits that have been used for offsets.
A marketplace
Governments can assist the establishment of biodiversity offsets markets by facilitating the establishment of
marketplaces. A marketplace for biodiversity for biodiversity credits will be virtual rather than physical and
will comprise brokers and traders. Brokers arrange trades between buyers and sellers within the like-for-like
criteria that apply. Traders may own credits themselves and sell these directly to developers. Governments
can build buyer and seller confidence in these institutions by encouraging brokers and traders to work
through the official credit register and by requiring them to have probity plans and probity audits.
2.5.5 The design of biodiversity offset markets
The design of a biodiversity offset market needs to be tailored to the nature of the demand and supply of
offsets and the offsetting processes that exist in the jurisdiction. The biodiversity offset policy can have a
significant influence on the level and nature of demand and supply.
The like-for-like rules (and including provisions for trading up) set the number of unique credit types and the
degree of segmentation in the market. Like-for–like rules that establish a small number of unique types result
in low market segmentation. However this can also mean that different biodiversity types have been
combined. Depending upon the level of variety existing across the jurisdiction, this could be taking the
diversity out of the biodiversity. Conversely if the like-for-like rules establish many credit types this will reflect
the biodiversity more accurately, but result in higher market segmentation.
The general level of demand is itself influenced by scope of the offset policy and in particular by the settings
for exemptions, the types of habitats and species required to be offset, and any thresholds applying to the
size or nature of impacts.
The degree of segmentation and the level of demand interact to influence the types of offset supply
mechanism that evolve in the market. These mechanisms include conservation banks, aggregated offsets,
bespoke trades and ‘over-the-counter’ arrangements.
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 28 of 41
A conservation bank is a mechanism where biodiversity credits are established in advance of any losses they
may be used to offset. A bank is an entrepreneurial venture that requires up-front investment into the credit
site. A conservation bank is usually designed to supply offsets over time for a multiple number of losses.
In contrast a bespoke trade is one where a credit site is established to supply the offset for a specific, known
loss. The credit site is not generally established in advance, but only in response to the particular demand.
Subsequently there is an interval between the agreement to a bespoke trade and the actual establishment of
the offset. Sometimes this interval can affect the completion of the project requiring the offset. However a
bespoke trade is a less risky proposition for the credit supplier.
An aggregated offset is similar to a conservation bank except that the offset demand or requirement is known
in advance and the aggregated offset can be specifically designed to compensate for a particular set of
biodiversity impacts. An aggregated offset draws together the offset requirements of a number of projects
where the biodiversity losses are known and supplies the required credits from a large single site or series of
connected sites.
Over-the-Counter schemes are similar to conservation banks but are designed to supply small offsets where it
is particularly important to minimise transaction costs. A government agency with responsibility for
approving or permitting small biodiversity impacts can establish an arrangement under which it sells credits
for the corresponding offsets ‘over-the-counter’ at the time of issuing the permit. These credits are
established in advance (i.e. a small conservation bank) either by the agency or by through a private supplier.
A question arises here as to what extent the biodiversity offset policy should be formulated to provide a well-
oiled offset market, for example by combining many biodiversity types together so the market could be
supplied by a small number of large habitat banks. To do this may be to lose sight of the purpose of
biodiversity offset policy, which is to contribute to biodiversity conservation in the jurisdiction. Nevertheless
it is important when developing biodiversity offset policy to consider its influence on the likely form and
effectiveness of the related offset market.
Biodiversity offset markets should also address other forms of risk for buyers and sellers. Developers are
buying credits in the market with a view to presenting the credits to the permitting agency to fulfil the
developer’s offset obligations. Developers need to be certain that they are buying the correct type and
quantity of credits. The market design needs to incorporate systems for the developer to obtain confirmation
of the acceptability of the proposed credit purchase. This is particularly important in bespoke trades.
Small-scale landowners considering entering the market as suppliers can face considerable upfront costs for
site assessment, biodiversity management plans and works, and permanent protection covenanting. The
market design should allow such suppliers to come into the market in a staged manner so that they can
manage the financial risk associated with these outlays. They should be able to make the sequential
commitments as demand for their credit types becomes more certain.
Whether or not conservation banks arise in an offset market will depend on the investors’ assessments of the
risks involved with the future demand for the credits that could be established in the banks. The offsetting
like-for-like rules (including any ‘trading up’ provisions) that set up the credit categories can have a major
influence on this question. Where credits are defined in broad categories, there is potential for one offset site
(bank) to provide like-for-like matches for a number of impact or loss sites. Conversely, where credit
categories are narrowly defined a bank will potentially match up with a smaller range of impact sites.
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 29 of 41
Thus in general banks could be expected to be more viable where the like-for-like rules and the credit
categories are broad, and vice versa. However broad like-for-like rules can mean that important distinctions
between biodiversity values are obscured and subsequently some of these values may be lost in the offsetting
process.
The viability of conservation banks is not just reliant on the like-for-like rules. The demand for offsets varies
geographically due to the interaction of the location of development and the spatial distribution of
biodiversity values. Banks can be feasible in situations even where relatively narrow like-for-like rules prevail
when the demand for offsets is concentrated on a relatively small number of credit types.
2.5.6 The benefits and risks of conservation banks
Conservation banks and aggregated offset have a number of benefits, but also some associated risks and
disadvantages. In summary the main benefits are:
� A number of offsets can be consolidated into a large contiguous site which can have higher
habitat and security values;
� The conservation effort can be concentrated into one project which can facilitate more specialist
input to offset design and management;
� A conservation bank can have landscape-scale benefits by providing connectivity and pre-
empting future fragmentation;
� There can be cost savings from economies of scale and reduced transaction costs;
� Conservation banks can provide developers with immediate access to credits thus reducing the
time required to find the offset for the project.
On the other hand there can be increased risks associated with conservation banks including:
� With a number of offsets at the same location the effect of a natural disaster or other failure of
the bank site is magnified;
� Pressure on the offsetting policy manager to relax the ‘rules’ to increase the commercial viability
of the banks.
3. Possible roles of government in establishing and administering policy on biodiversity offsets (for
each, describe briefly what it entails)
3.1 Policy-maker/regulator
Making policy and regulating are functions unique to government. The development and implementation of
biodiversity offset policy or regulations depend on government action. The broad options for biodiversity
offsets policy are discussed in section 2.2.
Different governments use different processes for making policy. In considering the process to be used for
the development of policy on biodiversity offsets, the BBOP principles outlined above can be helpful, in
particular the following that relate to process:
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 30 of 41
o stakeholder participation;
o equity – consider how risks and rewards can be distributed in a fair and balanced way;
o transparency; and
o science and traditional knowledge –policy informed by scientific knowledge and taking appropriate
account of traditional knowledge.
Biodiversity offsets policy is often developed in the context of a broader biodiversity conservation policy.
There can be connections between offsetting and other approaches to biodiversity conservation policy such
as a protected area system, land use planning and investments in conservation gain. There are also technical
links such as common information systems and metrics.
Policy making usually entails the development of policy options, consultation with stakeholders, assessment
of options and finalisation of preferred positions. Governments can make formal commitment to final policy
through proclamation or legislation.
Plans and adequate arrangements for the implementation of policy are critical to success. As biodiversity
offsetting can be a new area of policy, it is prudent to build in a process for monitoring and review so that
refinements can be made over time.
3.2 Provider, curator and source of authoritative biodiversity information
Government agencies commonly collect data about biodiversity and natural resources. These data may relate
to general biodiversity information such as vegetation cover and type or to more specific aspects such as
species occurrence and habitat characteristics. Over time governments often build up significant collection of
biodiversity information.
Protocols for the collection, quality assurance and safe storage of these data can be valuable to ensure that
authoritative information is available for application to biodiversity offsetting. These systems should also
enable other (non-government) organisations to contribute data to the national databases.
Biodiversity information needs to be analysed and modelled in specific ways to create the tools necessary for
the implementation of biodiversity offsets policy. This could be, for example, the delineation of bioregions or
ecosystems, the classification of vegetation types by significance, systematic conservation planning to
determine the optimum configuration in the landscape of a network of areas to conserve biodiversity, or the
spatial variation of habitat quality.
Private consultants and companies often play important functions in biodiversity offsetting processes,
through for example the assessment of impacts and the identification and evaluation of potential offset areas.
Access to the relevant government biodiversity information and tools is very important for the participation
of the private sector.
3.3 Buyer of offsets
Regulations for biodiversity offsets should naturally apply to the government itself. Governments are often
responsible for activities such as road building, water supply and other public infrastructure projects and
where have biodiversity impacts within the scope of the policy or regulation, it will be necessary for the
government, or the government agency, to provide offsets.
In these situations the government could provide offsets by creating credits on public land or government-
owned freehold land (see below), or more commonly, acquire a third party offset.
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 31 of 41
3.4 Seller of offsets
Biodiversity gain can be created by transferring freehold land into publically owned protected areas, or by
elevating the level of protection of existing areas of public land. As discussed in section 2.1, two types of gain
can be generated by these interventions: gain from the change of the use of the land and gain from the
increased security of the biodiversity associated with the land.
Governments make decisions from time to time to create protected areas (and generate gain) within the
context of broader biodiversity conservation policy. The principle of additionality - requires the conservation
outcomes the biodiversity offset delivers to be demonstrably new and additional and not to have resulted
without the offset. This principle is relevant when governments are considering whether or not the gain
generated from new protected areas (or improvements to existing protected areas) can be considered as
biodiversity credits that can be used for offsets.
The additionality principle indicates that the creation or expansion of protected areas as part of a
conservation reserve programme and for general biodiversity conservation purposes should not result in
biodiversity credits or be used for biodiversity offsets if government should undertake the work as a matter of
public duty. However, credits and offsets can result from the establishment or improvement of protected
areas where the following conditions apply:
o The creation of the protected area is over and above existing plans and programs for protected
area establishment;
o At the time of its establishment the purpose of the protected area is specifically nominated by
the government to be for offsetting.
o The decision to create the protected area is linked to nominated current or future developments
requiring offsets.
o The improvement of a protected area is specifically for the purpose of offsetting a loss within the
protected area.
Subject to these conditions, a government could create credits from new protected areas and sell them to
parties requiring offsets.
Where an offset market exists, governments need to consider fair competition principles when they enter the
market as a seller. Governments can have inherent cost advantages (such as those relating to taxation) that
should be mitigated so that government-owned credits do not unfairly compete with privately owned credits
in the offsets market.
3.5 Broker
In offset markets, brokers perform the role of intermediaries between buyers and sellers. Brokers can be
particularly useful for arranging bespoke trades where potential suppliers of specific credit types have to be
individually identified and brought into the market. In contrast, owners of conservation banks often sell
credits directly to buyers, without the intervention of brokers. Brokers can also be a source of advice and
expertise to inexperienced and infrequent buyers and sellers who may lack the confidence to deal directly in
the offset market.
The brokering role is usually one for the private sector, but there can be circumstances where a government
may chose to provide a broker service. This could be, for example, in the start up period of an offset market
when there is uncertainty about the functioning and likely strength of the market; or in areas where the
market may be too thin to support private commercial brokers.
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 32 of 41
Where there are commercial brokers operating in the market, a government broker should operate on a full
cost pricing basis in order to maintain fair competition.
3.6 Operator of register of credits, standard setting
Credit registers record and track ownership information of biodiversity credits and provide quality assurance
through the credit registration process.
The establishment and operation of credit registers is a natural function for government. Credit registers can
be set up formally through legislation or administratively through a government agency.
As biodiversity credits are traded they have the characteristics of property, whether this is formalised through
legislation or not. Thus it is very important that the credit register is established with a high level of
accountability and attention to detail. Credit registers need to be kept up to date, accurate and authoritative.
There should be formal rules for the operations of the register including registration, changes of ownership
and cancellation.
The initial recording of a biodiversity credit on the register provides the opportunity for implementing the
standards set for offsets. These are the standards such as for site assessment, management plans and gain
calculations that are set for offsets through documents complementary to the offsets policy. Biodiversity
credits need to be fit for the purpose of being biodiversity offsets and acceptance of credits onto the register
provides the process for checking this requirement.
3.7 Provider of process to ensure permanence of offsets
Biodiversity offsets need to be permanent where the associated losses are permanent. Permanence is not
about making an eternal guarantee about an offset, but rather arranging for a permanent institution to make
a binding commitment to the ongoing responsibility to maintain the offset. In many jurisdictions, the relevant
permanent institutions are landowners (for freehold land) and government. That is, it is assumed that there
will always be an owner of freehold land and that there will always be a government.
Government has a role in arranging permanence for offsets on both freehold and public` land. The
establishment of third party offsets on freehold land involves some form of statutory agreement with the
current landowner. Permanence requires that future landowners are also bound by this agreement. This is
usually achieved by attaching the agreement to the land title along with a legal requirement that future
owners are bound by the agreement. Government action is required to establish these mechanisms in law
and in being a party to the individual agreements.
On public land, offsets usually require some elevation of the level of protection (security) of the subject land,
for example through the proclamation of a conservation reserve or a national park. These decisions are taken
by government and are usually implemented through legislation.
In countries where different forms of tenure prevail (such as leasehold or community ownership), other
approaches to ensuring long-term security need to be considered. The form of these approaches will be
strongly dependent on the country’s legal framework.
3.8 Monitor and enforcer
Governments’ role in monitoring the integrity of biodiversity offsets and managing compliance issues depends
on the nature of the offset. For offsets provided directly by the developer (first party offsets) there will
usually be provisions in the development approval instrument (i.e. the permit or consent often arising from
an EIA) for a government agency to monitor the offset site and initiate a series of compliance procedures if
certain specified actions are not implemented, or certain specified targets are not met.
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 33 of 41
Where the offset has been provided through an offset market (a third party offset) the developer is relieved
of responsibility for establishing and managing the offset when the permitting authority accepts the
biodiversity credits (purchased by the developer) as a complying offset. The credit supplier takes on
responsibility for the offset, and monitoring and compliance is focused on the credit supplier rather than the
developer. As described above, the government will have monitoring and compliance responsibilities through
the provisions of the statutory agreement with the credit supplying landowner.
Within government, the agency responsible for granting the development approval that requires the offset is
ultimately responsible for monitoring the ongoing integrity of the offset. However, another government
agency may be responsible for the agreement with the landowner for delivering the biodiversity credits,
including the monitoring and compliance provisions in the agreement between government and the
landowner (or other entity generating the credit through agreed conservation activities). In this situation
there should be some form of understanding between these agencies regarding reporting and action on
monitoring information and compliance actions.
3.9 Identifying and managing conflicts of interest between these roles (probity)
Given the various roles for government in biodiversity offsetting that have been explored above, it is clear
that there is potential for conflicts of interest. Examples of potential conflicts of interest include:
o The government as a developer of infrastructure projects and as the regulator specifying and
enforcing requirements for biodiversity offsets;
o The government as operator of the biodiversity credit register and as a supplier of offsets seeking
registration of its credits on the register;
o The government as monitoring and enforcement agency and as a supplier of offsets managing and
maintaining credit sites.
These potential conflicts of interest do not necessarily mean that governments cannot undertake a variety of
roles relating to biodiversity offsets. However they do mean that potential conflicts need to be identified and
arrangements put in place to manage and resolve conflicts as they arise. This process is referred to as
probity. Probity is a feature of the design and implementation of an offset system by government that is
concerned with integrity in process and ensuring that all parties are treated with fairness and equity, in a
system with good governance.
Probity involves an examination of the processes involved in the various roles, describing and separating
responsibilities and identifying issues including conflicts of interest, confidentiality, information handling and
decision-making. Usually a probity plan is prepared by an independent probity adviser that sets out in
advance how these issues will be handled. Measures included in probity plans include the clear separation of
decision making, secure arrangements for handling information and formal declarations of personal conflicts
of interest. The independent probity adviser will generally review operations from time to time and provide a
report to the various parties on compliance with the probity principles and the other provisions of the probity
plan.
3.10 Creating the market
Market-based instruments offer policy makers a number of benefits, in terms of effectiveness and efficiency,
and markets in biodiversity credits are no exception. However, markets of any kinds are dogged by market
failures, and markets related to biodiversity are particularly controversial, given the public and open access
nature of biodiversity and ecosystem services. With biodiversity, market failures are typically caused by the
existence of externalities, imperfect information, and the non-excludability or non-rivalry of biodiversity’s
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 34 of 41
goods and services19
. Any market-based approach to biodiversity offsets will thus need to be developed with
great care.
The key actions for government to set up a credit market are to:
• Establish the units of trade: Define the units of trade (credits), the metrics for their
measurement and the processes by which they will be measured in the field. Establishing credits
as property through legislation can also be beneficial.
• Set up a credit register: The register provides certainty to the market about the quality of the
credits and about the ownership of credits.
• Facilitate the establishment of marketplaces: Assist buyers and sellers of credits to find each
other by encouraging and accrediting brokers, over the counter facilities and conservation banks.
In some circumstances, the government may establish a state-operated broker.
• Identify and deal with risk for buyers, sellers and the environment: The parties in the market
need a reasonable level of confidence in order to participate. Buyers need confidence that the
credits they buy will be accepted as offsets. Sellers need confidence that if they make
commitments to establish supply, there will be some demand for their products. The flexibility
built into the market should not always be at the expense of the environmental outcome.
• Consider customer service, competition and efficiency in the market design: The market design
needs to be responsive to the needs of customers (e.g. developers can procure their offsets in
reasonable time). Facilitating competition and avoiding monopoly supply helps achieve fair
prices. Efficiency should also be built into the market design, for example by making credits
divisible so that buyers can buy just the number they require.
4 What kind of capacity does government need to take on biodiversity offset policy?
4.1 Costs and cost recovery
Government and private sector roles
An initial consideration of the requirement for government capacity is the relative role of government and the
private sector, particularly in the implementation of biodiversity offset policy. In jurisdictions where much of
the implementation is undertaken by the private sector through markets, the need for government capacity
and resources will be significantly reduced.
However, the task of policy development (and regulation where this is adopted) does fall to government.
Costs can be considered in two main parts –the development of policy and the operation of the offset
scheme. The main sources of cost in the policy development process are:
• Policy development and preparation of guidelines
• Regulation making (may require new legislation and amendments to existing legislation)
• Preparation of standard forms and procedures (and their documentation with accompanying
guidance in manuals)
• Biodiversity information systems (collection, storage, analysis). This usually builds on existing
information and systems.
The main sources of cost in the operation of the offset policy are: 19
OECD, 2004.
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 35 of 41
• The assessment of individual development proposals, usually using existing processes
• The specification of offsets based on like for like criteria and loss gain metrics
• A case management system that documents the flow of applications through the process
• Monitoring and compliance of offset sites
• Communications (websites, information sheets, brochures)
In a regulated context where offsets are supplied through a credit market, governments may be involved in
establishing and operating the credit register. The main sources of cost in this situation are:
• Establishment of a credit register through legislation
• Establishment of credit property rights (legislation for credits as property)
• Operation of the register and implementation of trading rules
• Development of guidelines for various trading mechanisms including ‘over the counter’ and
electronic trading
In some circumstances, a government may offer a broker service for suppliers of credits and buyers. This
option could be adopted as a transitional measure at the start up of an offset scheme where there is much
market uncertainty and the private sector is reluctant to establish broker services. The main sources of cost
for brokers are:
• Recruitment of suppliers including site assessment, preparation of management plans and
calculation of biodiversity gains
• Receiving enquiries for offsets from developers and matching these to supply
• Managing databases of buyers and suppliers
• Facilitating transactions between buyers and sellers through negotiation or bidding
• Arranging and executing contracts of sale
• Managing contracts for site management and reporting to compliance authorities
Governments will usually be the only institutions that can make legal arrangements for the permanent
security of offset sites, where this is required. These arrangements include on-title agreements, private land
surrender and inclusion into a public conservation reserve and the creation of protected areas on private land
or by the reclassification of the status of public land. These processes will usually already exist in the
jurisdiction and the costs will be known from previous experience.
The costs associated with these various processes and services will vary from country to country and need to
be estimated on a case-by-case basis. However, experience in jurisdictions that have already established
policies and offset schemes of varying design and complexity has demonstrated that these are not trivial
tasks. It can be anticipated that it would take several years and the input of a variety of expertise (see below)
to develop a policy and establish an operating scheme.
Cost recovery
While there are many costs to be considered as identified above, a government could recover these costs in
part or in full. This is done by charging fees for the services provided to the users of the offset scheme. Cost
recovery may be particularly appropriate where credit markets are established for the supply of biodiversity
offsets. Not only does this ease the burden on the public purse, it also leads to the incorporation of more of
the transaction costs into the price of offsets which results in more economically optimal outcomes.
It may be less appropriate to implement full cost recovery for services associated with tasks such as policy
development, legislation and policy implementation where these are considered normal functions of
government.
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 36 of 41
Cost recovery usually involves the following steps:
• Define the services to be provided and allocate inputs (labour and other costs) to each service
• Estimate the service levels: that is the numbers of various services provided over each time
period
• Set the cost of services (the fees) to achieve partial or full cost recovery
• Consider which parties will pay the fees and when the fees will be collected. It may be
advantageous to delay the collection of some fees (for example, associated with credit creation)
until the time of credit sales.
Where a government and the private sector are both offering the same services to the market, any
requirements of government competition policy will need to be taken into account.
4.2 Skills and capacity
The development and implementation of biodiversity offset policy spans a wide range of professional and
technical skills. Box 6 identifies the main skills and inputs required for the four main segments of the
framework.
Box 6: Skills and capacities for biodiversity offsets
Framework
segment
Policy/regulation Credit register Credit market Offset security
Skills and capacity Biodiversity policy legal legal legal
Biodiversity science
(including spatial
information and
modelling
Information
technology
economic Protected area
planning
Information
technology
brokers
Field assessors Offset analysts
Land use planning, EIA
4.3 Staffing levels
Dependent on case load, complexity of system
Staffing levels depend on the number and complexity of the offset scheme. The most labour intensive area of
work can be associated with the assessment of biodiversity losses and gains, where this involves field work.
Increased use of mapped and modelled biodiversity information can reduce the need for intensive field work.
Staffing levels need to be considered in the context of the size of the offset transaction. Staff costs are part of
transaction costs that are usually intended to be a relatively modest proportion of the overall cost of the
offset. A scheme with a high price transaction (e.g. $1 million) may require and be able to support higher
staffing levels than one with smaller transactions (e.g. $10,000). The design of the scheme would take this
into account.
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 37 of 41
5 Lessons learned to date and some suggested ways forward for governments interested in exploring
biodiversity offset policy options
5.1 Lessons learned
This section sets out some of the lessons that have been learnt from the experience in various countries from
designing and operating biodiversity offsets policy and programmes. This is not intended to be a complete
‘how to do it’ catalogue, but rather as a guide to some starting points when considering an offsets policy. The
main lessons are:
• If the objective is to achieve a comprehensive biodiversity offsets, then regulation to require offsetting
will be required. In the absence of regulation, only a minority of companies are likely to see a business
case for voluntary offsets.
• Any policy and legislation on biodiversity offsets need to be clear and definitive about the circumstances
in which offsets are required, the explicit outcomes desired, and the rules by which the offsets will be
specified and measured (i.e. what criteria and indicators).
• Biodiversity offsets policy should be based on sound principles. In considering the development of policy
on biodiversity offsets, the BBOP principles outlined should be considered.
• Keep the rules as simple as possible. Specify the basics necessary to achieve the biodiversity conservation
objectives but allow sufficient flexibility for the scheme to provide offsets for developers in an economical
and timely manner. Where there are overlapping jurisdictions (e.g. in federal systems) or overlapping
policies, seek to have only one offsets scheme or, if this is not possible, arrange accreditation between
levels of jurisdiction so the offsets can be arranged through a single process.
• Offer guidance and examples through clear and authoritative publications so people know what to do,
and what to expect from the system in terms of cost, time and support.
• If the system uses biodiversity credits, create legal certainty around the property rights of credits and the
security of offset sites to enable people to make investments.
• A biodiversity offsets policy requires biodiversity data and mapping as basis for implementation. A
scheme can be put into operation with a relatively limited biodiversity information base and a simple loss
and gain assessment method. However, the design of the processes should attempt to take into account
the uncertainties created by the limitations of information and methods to avoid unintended losses of
biodiversity.
• Adequate monitoring and compliance with offset requirements is critical to success. Past failures have
often been associated with lack of monitoring and enforcement of EIA or offset requirements.
• Adaptive learning, based on the monitoring above, is recommended to help policy design and
implementation evolve based on experience.
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 38 of 41
5.2 Suggested ways forward for governments interested in exploring biodiversity offset policy options
The decision to introduce a policy on biodiversity offsets is a significant step on the road to sustainable
development and biodiversity conservation. It is natural that, prior to any commitment, governments will
undertake a substantial body of background work that could include information gathering, cost benefit
analysis, pilot projects and the development of policy options. The nature of these tasks is outlined below.
• Fact-finding and gap analysis - policy: Generally speaking, governments already have in place a range of
law and policy that is relevant to biodiversity offsets (see section 2.1). A first step is thus to undertake an
analysis of existing relevant policy at the national or regional levels (e.g. EIA, conservation law including
protected area legislation, planning regulations, sectoral policies, fiscal policies, liability regimes, land
tenure, indigenous peoples’ rights, strategic environmental assessments, land use plans and so on) to
explore the extent to which these serve to require, facilitate or even present a barrier to undertaking high
quality biodiversity offsets.
• Fact-finding and gap analysis – biodiversity data: A certain depth, quality and consistency of biodiversity
data is needed in order to assess projects’ impacts on biodiversity, to plan appropriate biodiversity offsets
and certainly to establish a regional or national system of biodiversity offsets. Most countries have at
their disposal quite a volume of habitat and species data, in a range of data sets of varying quality and
scope, held by government, NGOs, academic organisations and even companies, some up to date and
some old. A gap analysis of existing biodiversity data and maps is thus a wise first step. Data is needed for
offset planning to support the classification of habitat types (and condition of such habitat), application of
‘like-for-like-or-better’ approach, site selection and potential designation of credit types, if aggregated
offsets or conservation banking is considered an appropriate approach.
• Fact-finding– cost-benefit analysis: In some circumstances it may be useful to undertake a
socioeconomic cost/benefit analysis of introducing no net loss policies. In particular such an analysis
could consider the benefits and costs to the economy, where the benefits could include environmental
benefits as well as the economic benefits of sectors that might expand, such as tourism and conservation
restoration. A regional impact analysis could also consider local employment effects.
• Pilot projects: Practical experience with designing offsets for individual projects can help governments
decide what nature and content of biodiversity offset policy would be appropriate for the country
concerned. Practical experience of biodiversity offset design that can inform the development of national
policy on the topic. Governments could work with potential pilot project partners to agree a description
of what is entailed in a pilot project, as the basis for discussion with potential pilot project partners, then
establish a Memorandum of Understanding for collaboration on a pilot project with the companies
concerned. The government can form a Working Group (comprising local experts and perhaps one or two
international experts with experience of offset design and implementation) to support the companies
concerned in the design of biodiversity offsets for their pilot projects.
• Integrating biodiversity offsets with land-use planning at the national or regional levels: Governments
could examine whether any regional land use-plans or strategic environmental assessments are planned,
and integrated biodiversity offset planning into these. Regional land-use and biodiversity offset planning
relies on the integration of biodiversity data and data layers concerning the location and nature of
development plans (e.g. mines, linear infrastructure, town expansion etc).These will be brought together
to serve as the basis for regional land-use and aggregated offset planning.
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 39 of 41
• Identify, analyse and evaluate policy options: The results of the fact-finding and of the empirical work
on individual pilot projects and integrating biodiversity offsets with land-use planning at the national or
regional levels described above can allow government to identify the full set of policy options. These
could range from ‘business as usual’ (no additional policy needed: offsets will be planned according to
companies’ and lenders’ business case for undertaking them voluntarily) to ‘conservation banking’
(requirements for offsets that developers can choose to meet by purchasing the correct number and type
of ‘biodiversity credits’). The options could include a number of other voluntary and regulatory models. In
each case, the respective advantages and disadvantages of the option can be articulated, as the basis for
discussion, together with a description of the legal, financial and human resources needed for the
government to implement each option. Consultation with stakeholders will be important throughout.
• Policy formulation and system design: Once the government’s preferred approach(es) are ascertained
during the policy evaluation stage above, government will need to draft any policy measures needed to
give effect to the preferred option, and undertake further work to design the system (e.g. exchange rules,
mapping, and any system of conservation credits) needed to implement the particular policy option.
Again, consultation with stakeholders will be important throughout.
• Implementation of policy, monitor and review.
6 Interested in learning more?
This paper was prepared by the authors as a contribution to the Business and Biodiversity Offsets Programme
(BBOP).
Over the last six years, the Business and Biodiversity Offsets Programme (BBOP), now a partnership of over 50
leading organisations and individuals including companies, governments, conservation experts and financial
institutions from around the world20
, has been exploring biodiversity offsets. The member organisations
comprise the BBOP Advisory Group, and are served by a Secretariat comprising two NGOs: Forest Trends,
which started BBOP, and the Wildlife Conservation Society.
Responding to the decisions by the Parties to the Convention on Biological Diversity at their ninth meeting
(CBD COP9) and other requests for work of this kind, the BBOP partners worked hard to reach agreement on
fundamental issues relating to biodiversity offsets, and to develop practical guidelines for offset design and
implementation. Chief among BBOP’s products to date is a set of ten fundamental principles (see Box 3 on
page 14) agreed and supported by BBOP members and increasingly adopted and used by other companies,
governments and civil society as a sound basis for ensuring high quality biodiversity offsets. In addition, BBOP
completed a methodology toolkit in May 2009 which includes three core handbooks on offset design and
implementation; resource papers on how biodiversity offsets relate to impact assessment and stakeholder
participation. It also contains case studies of the BBOP oil and gas and mining pilot projects and other offset
and compensatory conservation experiences; and supporting material such as a glossary of technical terms.
All of this material is available on the website: http://bbop.forest-trends.org/guidelines and a CD-Rom. See
Box 7.
17
For the full list of BBOP Advisory Group members, please see:
http://bbop.forest-trends.org/documents/BBOP%20Advisory%20Group%20Members.pdf
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 40 of 41
Box 7: BBOP publications, May 2009
See http://bbop.forest-trends.org/guidelines/index.php
Following the first phase of BBOP’s work (November 2004 – June 2009), the programme is now scaling up
during its second phase (July 2009 – July 2012), and looking ahead to a third phase.
The BBOP Executive Committee (which sets the group’s strategy and is elected from its Advisory Group
members) has established six priorities in the period to July 2012:
• Standards on biodiversity offsets – developing internationally agreed and certifiable standards for
biodiversity offsets. Starting with agreed protocols for verification and auditing of biodiversity offsets,
tested at pilot sites, a draft standard on biodiversity offsets will be made available by July 2012.
Subsequent versions with improved indicators and guidance notes based on experience from using the
draft will be issued during BBOP’s next phase, which will run to July 2015.
• A broader portfolio of biodiversity offset experiences – demonstrating through BBOP pilot projects and
others’ experiences how biodiversity offsets could work in a broad range of countries and industry sectors.
• National level interventions – providing technical support and policy advice on biodiversity offsets,
landscape-level and regional planning to governments, through general reports and specific advice.
• Better guidelines – improving the BBOP guidelines on how to design and implement biodiversity offsets,
based on broader geographic and sectoral experience of BBOP members and others.
• Training and capacity building – training a cadre of professionals worldwide to support companies and
governments in the design and implementation of biodiversity offsets and associated regulation and
policy.
• Improved Communications / Global Forum – providing a range of communications products emanating
from the work streams above and serving as a global learning forum on biodiversity offsets
BBOP’s broad membership offers a tremendous wealth of expertise, experience and technical assistance on
biodiversity offsets from all around the world.
BBOP would be glad to hear from and ready to welcome new members interested in joining the Advisory
Group or the Learning Network. For further information, please contact: [email protected] .
Crowe & ten Kate for BBOP: Biodiversity offsets - Policy Options for government
Page 41 of 41
REFERENCES
Business and Biodiversity Offsets Programme (BBOP). 2009. Business, Biodiversity Offsets and BBOP: An Overview.
BBOP, Washington, D.C. www.forest-trends.org/biodiversityoffsetprogram/guidelines/overview.pdf ISBN 978-
1-932928-29-7 (paperback) ISBN 978-1-932928-30-3 (PDF)
Business and Biodiversity Offsets Programme (BBOP). 2009. Biodiversity Offset Design Handbook. BBOP, Washington,
D.C. www.forest-trends.org/biodiversityoffsetprogram/guidelines/odh.pdfISBN 978-1-932928-31-0
Business and Biodiversity Offsets Programme (BBOP). 2009. Biodiversity Offset Design Handbook: Appendices. BBOP,
Washington, D.C. www.forest-trends.org/biodiversityoffsetprogram/guidelines/odh-appendices.pdf. ISBN 978-
1-932928-32-7
Business and Biodiversity Offsets Programme (BBOP). 2009. Biodiversity Offset Cost-Benefit Handbook. BBOP,
Washington, D.C. www.forest-trends.org/biodiversityoffsetprogram/guidelines/cbh.pdf. ISBN 978-1-932928-
33-4
Business and Biodiversity Offsets Programme (BBOP). 2009. Biodiversity Offset Implementation Handbook. BBOP,
Washington, D.C. www.forest-trends.org/biodiversityoffsetprogram/guidelines/oih.pdf. ISBN 978-1-932928-34-
1
Business and Biodiversity Offsets Programme (BBOP). 2009. The Relationship between Biodiversity Offsets and
Impact Assessment: A BBOP Resource Paper. BBOP, Washington, D.C.www.forest-
trends.org/biodiversityoffsetprogram/guidelines/eia.pdf ISBN 978-1-932928-36-5
Business and Biodiversity Offsets Programme (BBOP). 2009. Biodiversity Offsets and Stakeholder Participation: A
BBOP Resource Paper. BBOP, Washington, D.C. www.forest-
trends.org/biodiversityoffsetprogram/guidelines/participation.pdf. ISBN 978-1-932928-35-8
Business and Biodiversity Offsets Programme (BBOP). 2009. Glossary. BBOP, Washington, D.C.www.forest-
trends.org/biodiversityoffsetprogram/guidelines/glossary.pdf
Hilderbrand R. H., Watts A.C. and Randle A. M. (2005) The myths of restoration ecology. Ecology and Society 10. 19.
Madsen, R.; Carroll, N,; and Moore Brands, K. 2010. State of Biodiversity Markets Report: Offset and Compensation
Programs Worldwide. Available at: http://www.ecosystemmarketplace. com/documents/acrobat/sbdmr.pdf
McCarthy M. A., Parris K. M., van der Ree R. et al. 2004. The habitat hectares approach to vegetation assessment:
An evaluation and suggestions for improvement. Ecological Management & Restoration 5, 24-27.
Millennium Ecosystem Assessment, 2005. Ecosystems and Human Well-being: Biodiversity Synthesis. World
Resources Institute, Washington, DC. Copyright © 2005 World Resources Institute
www.millenniumassessment.org/documents/Morris R. K. A., Alonso I., Jefferson R. G. and Kirby K. J. 2006. The
creation of compensatory habitat – Can it secure sustainable development? Journal for Nature Conservation
14,106-116.
OECD, 2004. Handbook of Market Creation for Biodiversity: Issues in Implementation. ISBN 92-64-01861-1.
http://www.peblds.org/files/Publications/OECD/OECD_Handbook%20of%20Market%20Creation_implementati
on.pdf
Race M. S. and Fonseca M. S. 1996. Fixing compensatory mitigation: What will it take? Ecological Applications 6,94-
101.
Salzman J. and Ruhl J. B. 2005. No net loss – Instrument Choice in Wetland protection. Duke Law school Research
Paper No. 1.
The Economics of Ecosystems and Biodiversity (TEEB). 2009. TEEB for policy-makers.
http://www.teebweb.org/ForPolicymakers/tabid/1019/language/en-US/Default.aspx
Walker S., Brower A. L., Stephens R. T., and Lee W. G. Conservation Letters 2 (2009) 149-157.
Wilkins S., Keith D. A. and Adam P. 2003. Measuring success: Evaluating the restoration of a grassy eucalypt
woodland on the Cumberland Plain, Sydney, Australia. Restoration Ecology 11, 489-503.